Indicators: Average True Range (ATR)
I'm in the process of building an Expert Adviser. This has brought me to this ATR indicator so that I can verify the iATR() results.
Much to my surprise, the results were sometimes 50, sometimes more than 250 basis points off.
Has anyone else experienced this?
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Average True Range (ATR):
Average True Range (ATR) is a technical indicator that shows market volatility.
It was introduced by Welles Wilder in his book "New concepts in technical trading systems". This indicator has been used as a component of numerous other indicators and trading systems ever since.
Average True Range can often reach a high value at the bottom of the market after a sheer fall in prices occasioned by panic selling. Low values of the indicator are typical for the periods of sideways movement of long duration which happen at the top of the market and during consolidation.
Average True Range can be interpreted according to the same principles as other volatility indicators. The principle of forecasting based on this indicator can be worded the following way: the higher the value of the indicator, the higher the probability of a trend change; the lower the indicator’s value, the weaker the trend’s movement is.
Author: MetaQuotes Software Corp.