Average True Range

The Average True Range (ATR) is a popular technical indicator used in binary options trading to measure volatility. It was developed by J. Welles Wilder Jr. and is widely used by traders to help determine potential price targets, as well as to set stop-loss and take-profit levels. In this article, we will discuss the ATR and how traders can use it in binary options trading.

The ATR is calculated as the average of the True Range (TR) over a specified period. The True Range is the greatest of the following:

Current high minus the current low Current high minus the previous close Current low minus the previous close The ATR is calculated by averaging the True Range values over a specified period, typically 14 days.

Traders can use the ATR to measure the volatility of an asset. Higher ATR values indicate higher volatility, while lower ATR values indicate lower volatility. The ATR can be used to determine potential stop-loss and take-profit levels based on the asset's volatility. For example, if the ATR is high, traders may want to set wider stop-loss and take-profit levels to account for potential price swings. Conversely, if the ATR is low, traders may want to set tighter stop-loss and take-profit levels to account for smaller price movements.

The ATR can also be used to determine potential price targets. Traders can use the ATR to calculate the expected price range for an asset over a certain period. For example, if the ATR is 0.5, traders can expect the price to move up or down by an average of 50 cents per day. This can help traders set realistic price targets for their trades.

In addition to its use in determining stop-loss and take-profit levels, and potential price targets, the ATR can also be used in conjunction with other technical indicators. For example, traders can use the ATR in combination with the Moving Average Convergence Divergence (MACD) indicator to identify potential trend reversals.

In conclusion, the Average True Range (ATR) is a useful technical indicator for binary options traders. It can be used to measure the volatility of an asset, determine potential stop-loss and take-profit levels, and set realistic price targets. As with any trading strategy or pattern, practice, experience, and responsible trading are key to success in binary options trading.

Moving Average (MA) Exponential Moving Average (EMA) Bollinger Bands (BB) Relative Strength Index (RSI) Stochastic Oscillator (SO) Moving Average Convergence Divergence (MACD) Fibonacci Retracement (FR) Ichimoku Kinko Hyo (IKH) Parabolic SAR SAR (PSAR) ADX (Average Directional Movement Index ADX)