Many technical analysts judge the market status just in a few moments by looking at the graphical charts and recent changes. However, not every time, the status of market can be analysed at ease and thus, fluctuations happen rapidly. FOREX or Foreign exchange markets are the part of currency market. In fact, they are globally distributed system for trading of currencies. It is also known as over the counter markets. This market is responsible for determining the foreign exchange rate, fate of shares and many other things. Analysis in this area is also very critical. Any one can predict by looking at the graphical charts or analysing the volatile periods. However, this method has some drawbacks, and thus making it inefficient.
In order to speculate the changes, the electronic trading platform has been designed for convenience. It is known as MetaTrader 4 or MT4. It is a widely used online retail foreign exchange platform. The software was developed by the MetaQuotes Software. It was released to the world in the year 2005. The software has been licensed to provide the trading platform for its clients. There are many variants attached to the software such as ATR MetaTrader, Indicateur ATR MetaTrader and many more. The popular clients for the software are Microsoft windows and thus, this platform works accurately on the Windows machines. Although Mac OS, has now joined the race and custom developed MT4 variants are available on Mac OS.
There is no doubt about FOREX being the biggest trading platform for many people. As a matter of fact, big international companies of the world participate in this market. Financial centres around the world use it as an anchor to perform trading between countries. In this, the currencies are traded in duos. The functioning of the FOREX is not simple. It runs deep in to many layers and gets monitored and operated on several levels. The financial centres around the world indulge in this process of buying and selling. The banks across the globe turn in to dealers and get involved in large FOREX trading.
ATR or Average True Range:
The Average True Range or ATR is a technically performed analysis. The indicator is used to the price trend. The changes and indication of new price trend can be performed with the Average True Range technical analysis. In short, the ATR is responsible for predicting the degree of price volatility or price changes. The Average true range or ATR works with the true range values and is an N day smoothed moving average. According to the inventor, the smoothing period should be for fourteen days.
The true ranges and ATR are calculated in the mathematical process by subtracting prices. The values or changes do not bring any difference in the manner of historical prices. They are adjusted back by subtracting constants to every price range. These adjustments are thus, employed to the stocks and contracts. The procedures which are computed depict the instability of stock prices. The standard procedures which are used to depict this instability are standard deviations or logarithmic price ratios. They are not the variant. The traders and analysts who make predictions about the future status of the stocks make use of the Average True Range method to calculate rapid changes. They also use other method of calculation known as standard deviations of log price ratios.
Calculation of ATR for stock market:
The index for the stock market can be analysed with the help of ATR. The current period for ‘n’ years can be calculated as:
ATR = ATR previous (n-1) + true range of the current period n
In this equation, the previous value of the ATR trading is required. In order to obtain the previous value of the initial ATR readings, one must calculate the average of days, measure of rapid volatility and optimal performance.The MetaTrader software helps to solve big calculations.
Prediction of ATR:
In order to reflect the changes of the market, the indicators are listed which include the previous day’s closure account and the high and low values. Wilder has defined the true range as the highest range among the three probable values: the distance calculated between the highest and lowest prices, the calculated amount of previous closing price and current highest price, and the calculated amount of the previous closing price and current lowest price. These measures help to calculate the average true range mathematically. The interpretation of the derived value is also simpler. If the ATR indicator is high, this means that the asset has at this moment the high volatility and if it is low, the asset has low volatility at this time. The last periods of trading chart are used to decipher the results.
Using the Average True Range in the MT4:
Calculating the instability of the prices can become little easier process when the software of Meta Trader includes the mathematical calculation of average true range. Considering the value of range of FOREX markets is the key to make moves in the given amount of time. The first easiest way is to calculate the difference between the highest cost and lowest cost in the chose amount of time period. The Indicateur ATR MetaTrader ATR MT$ indicators which are present in the MetaTrader platform, does not require any download, thus making it convenient for the use. Along with it, the software contains wide variety of tools which can be downloaded when required. There are many plugins available with installation of the MetaTrader 4.
Using ATR MetaTrader Indicators:
As we understood, the ATR is a technical indicator which helps to predict the rapid changes of the prices. The tool is simple and very helpful for currency traders. It can be used regardless of any trading style. The indicator in this scenario, use the previous record currency and values from previous closure account. The average MetaTrader Indicator can also be used in many other forms, such as position sizing in financial trading. In reality, the low volatile market has larger trading platform than the high volatile market. The ATR serves as the trend asset device and thus, current ATR values can be used as the size of potential adverse movement. The other uses of ATR have been made for trading signal and as a filter.
- Making use as a trading signal: It provides the indications of purchase and sale. For instance, imaging there is a big fluctuation in the prices, and then by combining ATR with a technical factor, you can consider taking a position.
- Use it as a filter: the ATR can be used as a good way to decipher trading signals. For example, if the ATR shows low instability rate then, one can avoid getting in to the position and locate a place in the market for oneself. The trend tracking perspective helps in this scenario.