Hi everybody Alex du Plooy from Expert4x and I hope this video gives you
lots of money-making forex trading ideas in this video we're going to be looking
at the ATR indicator the average true range indicator and how you can use it
to make lots of money in the forex market now I would really like you to
pay quite a lot of attention to the contents of this video because that is
not an idle threat or a marketing phrase this indicator has unbelievable
information that it can give you now I'm going to introduce this indicators
saying that every currency in the market has its own profile now I've got three
four currencies on the screen at the moment and you can see they all have
different movements during the day and these bars are one-hour bars there
should be 24 of them and they show how volatile currencies are during various
stages of the day now too many they look the same but to the trained eye there
are some really important differences here and that any trader should be aware
of for instance this currency year has a funny one where it peaks at a certain
time of the day in general if you look at these ones you've got the Asian
market over here the UK market over year the US market where both the UK and the
US open at the same time that's why you have a peak there and in a scroll that
goes right down into the quiet Asian market again that's a normal type of
movement but as you can see there are some currencies that are different for
instance here you've got a country that's got the same level of volatility
in the Asian market as it has in the UK market even more then you have one
Senate show that show the same some have one peak in the u k-- US market others
have two peaks and some don't go down as much as others during the roll down to
the Asian market so each one has its own little personality and you need to be
aware of it now the ATR is a fantastic - to give you an idea of the personality
of each particular currency now how do you load this particular indicator and
you go to empty for you go to the indicator icon click on it you select
oscillators now oscillator is one way something goes either oversold and
overbought and oversold and overbought so it oscillates from high to low and
the true range indicated as the same but it doesn't it uses high volatility and
low volatility high volatile and low volatile as its oscillation so you then
select the average to range the ATR indicator that's how you load it and I'm
not gonna go into it into a lot of detail because it's a very very simple
indicator to understand now I'm gonna explain it to you from a daily
perspective if you want to know what the average daily movement is for instance
for the euro what you could do is you could look at the range in other words
the size of the candle a daily candle the high to the low you can measure that
for the lost let's say 20 days and you could then get an average for the last
month's trading month by adding them together and averaging them out and that
would be the daily average true range of the currency that you're measuring so
all it does is averages the range and I like to think of them as candles it's
not a hundred in curry but it's close enough to be correct the candle sizes
that you're looking backwards on so you have to explain to you you can do that
on a daily basis but you can also look go down to the one-minute candle you can
say what are the sizes of the one-man minute candles in the last 50 candles
and you and you would then go to the input screen and you would put 50 as the
period because you won't want to look back 50 candles and it will then bring
out the indicator showing you the average over that particular period so
that's how that's how this one works it's very easy it's basically showing
you the volatility of the currency over a period of time measured by what I say
is the candle size and that's good enough for you to understand what it
means and also very important to understand this this measurement it is a
measurement of volatility it does not help you with direction of trade so if
we look at this chart that mt4 provides it is saying okay there's an at a time
of low volatile oh and then it shoots up that you can actually see it on the
chart it shoots up high and then as it gets high it starts consolidating and
starts going low and then when it's low it shoots up again and so it's it it
gives you the high volatility times and the low volatility times win and in
general when it's high it's likely to slow down and when it's low it's likely
to explode so it provides information for explosive moods and also for
consolidation moves in the market so the ATR helps you compare the volatility of
different currencies compared to each other and I'll show you a good example
of that and the idea helps you to compare the
volatility of a one currency at various times of the day and you can act make it
you can make money from this so let's let's have a look so on your screen you
can see the 360-degree Forex indicator that we've upgraded just recently and it
really gives you a view of the whole market based on a number of indicators a
whole host of indicators you can see the how every single currency compares on
every single time frame for every four months the major indicators and you can
also see the relative strength of each currency so it is really a 360 degree
indicating that you can see the whole market in one go but what we're
interested in today is we interested in the ATR so what I've done is I just fold
it literally fold it away all the others hid the ones I'm not interested are and
now I'm only looking at the ATR and I'm looking at about 27 or so currencies I'm
looking at all the timeframes that we'd look at but I don't really use the
shorter time frames I use the sort of daily
one's mainly but let's let's get into this right away so how does this help
you firstly it tells you which currencies other most volatile
currencies in the market and which ones are the least volatile so I've sorted
the daily column you can see I've sorted it and the euro euro pound is the least
volatile currency because it only moves on average and this is strictly you must
understand this an averaging indicator on average it only moves
42 perps a day whereas the pound Zealand moves hundred and seventy-four perps a
day it's four times more volatile than the hero pound now and then it's as you
can see it's sorted all the currencies in in order so what how does that help
you in any way well firstly if you a breakout trader or a trained trader
you're looking for the fast moves that really move in the market you should be
using these currencies at the top here if you use using sideway techniques that
dawdle in the market then you should be using these currencies down yeah that's
one way of using that information the other thing is use the to determine
what's targets and stops you you need for instance if you trading the Euro
Pound you shouldn't ever have 200 pips top or a 200 per target the the power
the Europe pound hardly moves in a day but if you're using the powered New
Zealand it's much probably ok to have 150 pips top and Ireland 50 per target
so you can size your targets and your stop losses according to the volatility
of the particular currency and this is important not only for manual trading
but it's also important for expert advisors or Forex robot trading you need
to know the currencies and you need to apply the appropriate settings for those
particular currency now and I fiction did he call this my vibration rate of a
currency because it shows you how much it vibrates
on a daily basis or on a four-hour basis you can get an idea of that type of
thing now yeah I've got a the indicator loaded on a one-hour time frame and the
default setting is 14 so stuck with that but every the every column here is a day
every column here is a day now if you look at this in this very carefully you
will see that this currency peaks at the same time every day and goes to the low
point at the same time every day so you go peaks in the middle low point at the
end peaks in the middle a low point at the end peaks in the middle low point at
the end fixing them at all like winter then fixing them at all low putting it
in peaks in the middle low point now I promise you that kind of information is
gold in the right traders hands you can make a lot of money knowing that you can
virtually spot the high and the low for this currency every day so this kind of
pattern is what forex traders look for when they forget trading Forex I leave
it to you to work out how to use this information but this is the kind of
information that the ATR provides as I said it's gold in the right hand now one
thing I just need to make you aware of that
sometimes price charts have five trading days and sometimes they have six trading
days so the broker trades a portion of the Saturday or a portion of the Sunday
and that sometimes distorts some of the readings that you will get when using
this indicator but it's not serious I'm just making you aware of it now you can
see quite and I'm going to just run you there's a small candle so that's likely
to be a Saturday candle so you guys Saturday let's go one two three and four
five and then you get another smoke a candle one two I started with these are
small candle day let's go to another small there's a small one one two three
four five there's another so there's gaps of five between the
small ones which shows you that the information then is collected on a
Saturday can distort the the readings on the ATR so you might find one trader has
different ATR readings to another trader because of the break or the broker
policies regarding five days and six days and also in certain cases the the
cutoff points of the candles but that's not serious because if you are on your
own of applying this consistently you're more interested in the differences
between the kook your own currencies and not other people's charts just just a
bit of information for you alright so what does the ati help you with firstly
it helps you decide which currencies are good breakup galaxies and trending
currency for instance for instance we have a technique called the double in a
day technique it's a technique where you can W forex trading account in one day
use on one tray now it makes common sense that if you're using that
technique you want a volatile currency that will trained quickly during that
particular day so you'll be selecting from the very top of this one and that
will provide you with a trend that will double your account in one day you won't
go down here and try and double your account you know I see people trying to
double their account using the euro for instance it's only mu 60 pips a day it's
not going to do the job the the kind of see that we find does
the job based is the bounty and that country but this is these tables are
very important for that kind of thing and using the shorter timeframe charts
it tells you when the currency is likely to move with more volatility and when it
is likely to rest and trade sideways now I've shown you that example two
Wyck everyday was virtually exactly the same turning point for this particular
currency and it will also help you size your targets and stops for Manuel and ei
trading so in other words lo voluntary currencies smaller stop smaller targets
I voluntarily currencies bigger shops bigger targets now I really hope I've
given you some ideas and some perspectives of the forex market the ATR
is really a good indicator that can give you the information that you need to
really trade it more efficiently than you did in the past
the ATR itself does not give trading signals but the information that it
provides is critical for you to make a lot of money in the forex market thanks
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you