What is the ATR?

What is the ATR (Average True Range) Indicator?

This indicator was originally developed by Wilder Jr. only for trading commodities. It does not show an indication of whether the price is trending higher or lower but only calculates the price volatility.

The suggested period value of the ATR by Wilder Jr. is a 14 period.

In the case of the No Nonsense Forex method we are only using the ATR to calculate the Take Profit Level and Stop Loss Level for the trades that we execute.

The No Nonsense Trading method places two orders each trade that look something like this:

The risk level for each trade is 1% making a total of 2% total.

Order 1: Risking 1%

Take Profit –  1 ATR amount

Stop Loss  – 1.5 ATR amount

Order 2: Risking 1%

Take Profit –  (determined by indicators)

Stop Loss – 1.5 ATR amount

Let’s do some math and calculate the ATR level together for a trade.

The Hypothetical Pip ATR Level is reading: 99 pips.

99 pips = 1st Take Profit

99 pips x 1.5 = 148.5 Stop Loss (Round up to 149 Pips)

The Average True Range is available on every MT4 software preinstalled. Although the preinstalled version is in it’s most primitive form and not that useful for trading our method it allows us to understand the concept.

A much better indicator that pre-calculates the ATR Levels for us and can be used in both the software simulator and live account is this indicator that you can download right here: HERE

Another option which is only for live accounts and not useful for back testing is the more advanced indicator called the No Nonsense Forex Trade Assistant but an even better one that works both on MT4 and MT5 can be found here.

This trade assistant will calculate the ATR take profit and stop loss, place 2 trades in 1 click, move the stop loss to break even after you have reached your first ATR of profit all automatically.

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