Forex ATR Ratio Trading for Strong Movements and Higher Probability of a Trend Change (ATR)

Forex High Probability Trading System – ATR ratio often reach high values after the prices quick and strong movements. Low indicator values often correspond with long periods of flat that can be observed on the market top and during consolidation. It can be intepreted according to same rules as other volatility forex trading indicators.

Forecasting method using ATR ratio is as follows: the higher is the indicator value, the higher is the probability of a trend change; the lower is the value, the weaker is the trend movement. In case the indicator value climbs above the blue horizontal line, it is time to buy or sell.

High ATR ratio price levels often correlate with high volatility. Low ATR ratio price correlates with low volatility, as the prices stabilize or move along the channel flat movement up to the possible breakout point.

 

Average True Range (ATR) is a favorite indicator of many professional traders, and one of the great things about it is that it’s rather simple in its design.

While many indicators wear multiple hats and try to do a few different things at once, ATR is just a measure of price movements over a specific period of time. If those movements increase in value, ATR goes up. If those movements decrease, ATR goes down.

 

• Upward Red ATR Ratio line above horizontal blue line
• CCI Trend green and above 0 line
• BBsqueeze blue or green and above 0 line
• Yellow number 3 dot below bullish candles
• The candle price above MA 28.

 

• Upward Red ATR Ratio line above horizontal blue line
• CCI Trend red and below 0 line
• BBsqueeze bleu or red and below 0 line
• Yellow number 3 dot above bullish candles
• The candle price below MA 28.

 

The Advanced Way with Price Action NOTE :

Price Action can have a huge impact on a trader’s performance. Inclusion of price action into an approach will often take place regardless of the trader or type of trading being done. Price action can help traders read trends, find support and resistance, and perhaps most importantly – manage risks.

Because, after all – if prices are trending higher, and we’re seeing continuous higher-highs, and higher-lows, wouldn’t it be reasonable to consider closing the trade if the trend reversed?

Remember, this is the number one mistake traders make, and this is the reason stops are so important. If the trend reverses, the trader’s best advice is often to close the trade and look for greener pasture elsewhere… because if the reversal continues against the trader, one loss can wipe away a lot of gains.

If traders are trading a trend, they can look to the previous opposing-side swing for stop placement. So, if an up-trend is being traded, we should be able to see higher-highs, and higher-lows. If we are buying to take part in the up-trend, we can look to place our stop below the prior swing-low.