How and Why We Must pay attention to Volatility
Hello Traders When we analyze a market, it is very important to take into account its volatility for the different time frames and times where we plan to trade. If volatility is too low we may have little or no chance at all of entering and leaving the market in a timely way with our expected targets and stops . If volatility is too high, we will surely have many opportunities for trades, but possibly the Stop needed will be much higher than expected. Let's see now how to measure volatility using the ATR (Average True Range) indicator The Range of a bar is the distance between its maximum and minimum price. The True Range includes the gap that may exist from the previous bar, therefore the True Range is equal to or slightly higher than the Range. The ATR is the True Range Average in the last N bars. In this example we see the ATR (14) on a Crude Oil & Euro Futures 5 Minutes Charts. As we see, the ATR ...