Definition
The Average True Range (ATR) Bands Indicator is a technical analysis tool used in MetaTrader 5 (MT5) trading platform to measure market volatility and provide traders with information about market trends. The ATR Bands Indicator combines the Average True Range (ATR) indicator with a moving average, creating a dynamic support and resistance level.
Working of ATR Bands Indicator in MT5
The ATR Bands Indicator is a combination of the Average True Range (ATR) and a moving average. The ATR measures market volatility, and the moving average is used to smooth the ATR readings. The result is a dynamic support and resistance level that can help traders identify market trends and potential trade opportunities.
The best settings for the ATR Bands Indicator in MT5 will vary based on a trader’s individual trading style and the market being traded. A common setting is to use a 14-period ATR and a 20-period moving average. However, traders may want to adjust these settings based on their individual needs.
| Settings | Value |
|---|---|
| ATR Period | 14 |
| Deviation | 2.0 |
| Calculating mode | close |
| Show Deviation line | no |
How to trade with ATR Bands
Traders can use the ATR Bands Indicator in a variety of ways, including identifying market trends, potential trade opportunities, and setting stop-loss and take-profit levels.
Open a Buy Trade
Traders can use the ATR Bands Indicator to identify potential buy trades. When the price of an asset is above the ATR Bands Indicator, it signals a bullish market, and traders may look for opportunities to open a buy trade. Traders can also look for a bullish candlestick pattern to confirm the trade signal.
Open a Sell Trade
Traders can also use the ATR Bands Indicator to identify potential sell trades. When the price of an asset is below the ATR Bands Indicator, it signals a bearish market, and traders may look for opportunities to open a sell trade. Traders can also look for a bearish candlestick pattern to confirm the trade signal.
Key points to remember while trading with ATR bands indicator In metatrader 5
- Use the ATR Bands Indicator in conjunction with other technical analysis tools for confirmation of trade signals.
- Adjust the ATR and moving average settings to match the individual trader’s style and market conditions.
- Consider using a longer ATR period during high volatility market conditions and a shorter ATR period during low volatility market conditions.
- Always use proper risk management techniques, such as setting stop-loss and take-profit levels, when trading with the ATR Bands Indicator.
Conclusion
The ATR Bands Indicator is a versatile tool that can be used by traders in a variety of ways. By combining the Average True Range (ATR) and a moving average, the ATR Bands Indicator provides traders with a dynamic support and resistance level that can help identify market trends and potential trade opportunities. However, traders should always remember to use proper risk management techniques and confirm trade signals with additional technical analysis tools before entering a trade.
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