The use of the Average True Range (ATR) within trading systems is not uncommon particularly in its use for defining initial stop levels as its role as a volatility measure takes into account potential movements in price.

However, its adaptability for both variable pricing and timeframe of trading instruments and strategies but also its potential use in other trading decision making action points is often underplayed.

With reference to market participant price action and order placement, we will explore the potential use of the ATR to:

  • Reduce the incidence of false breakouts
  • Assist in the setting of meaningful profit targets
  • Its use in setting initial stop but also as part of a trail stop system
  • Compensate for limited information during the entry of pending/conditional orders.

The ATR will be explored to provide justification of a position while using LIVE examples during the session.

As developing consistency in trading action so allowing effective measurement of system components and refinement of trading plans is critical for development of individually appropriate trading systems, during the session we will give example statements that could be adapted and integrated within your written trading plan.