To make it easy to understand the creator of this indicator established a formula that will be useful to operate and obtain the value of ART: Formula: ATR = Moving Average (Trj) (n) Trj = The maximum value of the three following values : High – Low , Alto – CierreJ-1 , Low – CierreJ-1 In a more extensive, after analyzing the formula earlier presented, the largest amount of 3 results (High-Low, High, Close, Low-Close) is the disparity between the highest value real and actual retail value, so in this instance the result is the ART. If this amount is not higher should continue to determine which is the greatest of all and thus get the true range. After having prepared this operation and have acquired the desired results, you must assign an average acquired from the N days, where N is = 14 or 13. As a general rule the ATR is used with periods of 14 days and can be measured by day, week or month. It is always advisable to use this flag set an order to reduce losses to avoid surprises, but based on the volatility of the market and take care of their gains acquired. Not recommend using this indicator for long periods because it can give inaccurate results.

How to place a “Stop Loss Order” based on ATR, for better gains: The following is an example of another way to use the indicator ATR and thus achieve better profits. Usually the operator uses an order of “Stop Loss” set at the time of surgery to prevent further losses. Commonly experts in the Forex market considered that the data support or resistance as a rule must be used to establish a stop loss, but also when using the ATR indicator this may vary. In the example described below is necessary to first establish a stop loss of 25% of the average true range of day and number of ART was reported that day was 140, so that continues to perform a multiplication of the two data, which will result in 140 x .25 = 35 pips. Already acquired this information you could place a “Stop Loss Order” of 35 pips from your entry point. How to understand the function of the ATR at the time of taking stock on the market: For example, if the result of ATR shows that low values indicate that the market is in a landscape of low volatility and a price range very small. If instead the opposite occurs and the ATR gives a result with high or high levels, which means that the market is in a period of increased volatility and therefore has a longer price ranges.