Home Trading Strategies ATR Indicator Secrets: Powerful Strategies to Profit in Bull & Bear Markets

ATR Indicator Secrets: Powerful Strategies to Profit in Bull & Bear Markets

ATR Indicator Secrets: Powerful Strategies to Profit in Bull & Bear Markets

hey hey what up my friend so in today’s video it’s all about ATR indicator scripts right ATR stands for average true range and I’m I’m gonna share with you right or rather you’ll discover write some really useful profitable trading techniques that you can apply to your trading and it’s stuff that you might not have seen before right so specifically here’s what you’ll discover today number one how to use the ATR indicator to identify explosive right breakout traits about to occur what’s the one thing to look for right the ATR indicator it will tell you they will talk about how to actually know predict right market turning points and identify potential high probability trend reversals ahead of time number three how to set your stop-loss like a professional trader because I know many of you write always you set your stop-loss the market hit your stop-loss and in reverse back in your original direction and if you know why is this always happening to me right don’t worry the ATR indicator can solve that problem as well it helps you to avoid there are stop hunting scenario and finally you’ve discovered how to use the ATR indicator to write massive trends in the market right the time of trends and other traders can only fantasize or dream up that kind of trends alright so sounds good right and here’s what I want you to do right now hit that thumbs up button and subscribe to my youtube channel the button is all below hit the thumbs up subscribe to my youtube channel and this way whenever I publish a new training and new video a new strategy a new technique you’re always updated never miss anything from me again alright so do it right now hit that thumbs up button subscribe to my youtube channel the button is below and if you’ve done it then let’s get started so now you’re wondering right hey right now how does the ATR indicator work what is it right so the ATR indicator okay it’s a volatility based indicator it measures volatility in the market and how it works is its completed using you know one of three methods I’ll explain why they are free later on but first right the three methods are this right the first method is current high – the current low second method to calculate that is the current high less the previous close or – the previous close that method is the current law – the previous clothes no right why there are three methods the reason is simple it’s because of the way that shots can form for example okay if the first one you get is let’s say a bullish engulfing pattern you go with method one right let’s say amici method one current hi les the current law this is the high minus the low and this will give you d true range of this this market then you are looking at if let’s say you are you have a bearish engulfing pattern on your chart so what you’ll do is you take the current low right – the previous close to give you this range over here so that’s a that’s how you actually you know calculate the crew range on your charts so why is it called average true range is because once you calculate all the individual true range candles value you then divide by let’s say 20 and that’s where you get the 20 period ATR does it make sense okay so if this a doesn’t quite sink to your hit just pause this video analyze and you can understand where I’m coming from right I might be a bit fast but because I don’t want to waste too much time on this the concept is very simple right so let me just if you want to find this out yourself right let me just break down the concept simply the concept is this is that the ATR indicator it measures volatility in the market this means if you notice the range of the candles is getting larger your ATR value should increase okay because it measures volatility in the markets so notice range of the candles getting larger ATR indicator value increase so now what about range of the candle is getting smaller what should your ATR indicator show you well it measures volatility so you’re in ATR value should decrease okay so once you understand this concept you’re good to go this is all there is to the ATR indicator it measures volatility in the market okay so if you don’t want to you know understand the calculation just know this one thing this is a important so moving on right how do you use the ATR indicator to identify explosive right moves about to occur right the secret is this is that up before I share with you right let me share with you how the market moves so market moves in cycle it doesn’t know move in one straight line you you know sometimes the market breaks out you know it goes very aggressively in one direction right trends and trends and trends and then it will take a brick right you dress ah right so something something like this okay let’s see the market breaks out trains right volatility is high and any means to rest you know pause right and then it makes another move either higher or lower you know whichever but the key thing that I wanna share with you is that the market moves from a resting period right to a huge moving period so in other words right why don’t you say is that the market moves in different volatility volatility cycle it moves from a period of low volatility to high volatility and then back to low volatility begin so the key thing right a secret I to identifying explosive breakup trades they’re about to occur is you want to identify low volatility period and here’s what you can do we are you wanna identify identify multi-year low volatility right and usually I look at it and a weekly timeframe so this means that there is a more potential move to catch a bigger wave to write a bigger trend to catch okay so let me share with you an example a few examples actually so if you look at this a crude oil weekly timeframe right you can see that you look back notice the price action unknown I mean notice the value on the ATR indicator which is this line over here it’s trickling lower down to this point over here a note at this point is at multi-year lows because volatility on crude oil at this point in time which is about April I mean June 2014 is a multi-year lows and if you look at that shot what you see you can actually no plot up basic support resistance level over here somewhere about here possibly one more here okay so you can see that hey where’s my ATR is missing okay which is some buck okay it’s back okay you can see the ATR indicator multi-year lows over here so one way to do credit is that if the market breaks out over you know a key level a key market structure like support or resistance right you can you know trait in the direction of the break-up because remember right I just said right that the market moves from a pair of low volatility to ha volatility so now it’s in a low-volatility environment so if the market lady does break down brick of support okay okay look we know shop this market right and in this case on hindsight a cherry-pick chart the market did collapse lower pretty badly so I don’t usually trade off the weekly timeframe so what it can do is that you can apply multiple time frame analysis so let’s say you know the weekly prices break below this key area of support the volatility is really low so what you can do is go down to the daily time frame and look for a tradable trading setup you know setup that you know how to trade like you know a bear flag pattern or prices at resistance etc so in this case okay price you can see right break below this area of support so you can see there are ample opportunities to shop this market you could have you know shorten on the bear flag pattern over here maybe even here or even over here okay or even if you could under a lower timeframe like a four hour time frame might even be possible to show that resistance of this our swing high I mean swing lows okay so the key thing is to pay attention to multi your low volatility on the weekly timeframe so none example alright let me share with you just one more zero dollar weekly timeframe so again let’s identify multi your low volatility in this case you can see that over here volatility it’s at multi yellow right very very low again so let’s look at the chart and see if we can identify any no key market structure it’s possibly there’s gonna you know the curve upward trend line okay let’s just draw this briefly possibly something like this okay and after which you can draw another support resistance level I would say this would be another key level to pay attention so say this over here would be a more obvious market structure away breaks the trend line as well as this area of support so again at this point look at the volatility of the market multi-year look right so when the price breaks below it again you can look to shot as mentioned you can go down to a daily timeframe and look for a possible or rather a trading setup that you recognize and one of the easiest ways just to treat a flag pattern it’s like a trained continuation pattern okay so if I were to just look back and share with you where you could have treated this okay so this was the break of trendline you probably won’t chaton on the brick of trendline right but over here when the price break below this area of support right possible bear flag pattern that you could have you know shorter here or even here but you get my point right low-volatility environment right leads to volatility expansion sometime in the future okay so that’s the first thing right on how to use the ATR indicator to identify explosive breakout rates about to occur second thing that I wanna share with you is how do you identify high probability trend reversal using the ATR indicator so one thing to share it is that uh the market are each and every day or every week or every month right the market tends to move in so-called fixed amount that’s like certain amount of potential energy for the market to move right so for example if you are looking at let’s say euro dollar the daily timeframe has an ATR of hundred pips what is telling you is that on average each day the euro dollar moves about 100 pips that’s the average daily range of euro dollar okay so if sometimes you notice that you roll all dollar has moved 150 or 200 pips for a day chances are it’s not gonna go and hit four five hundred pips it could happen right maybe because of a news event right but more often than not if it reaches 150 200 pips the market tends to snap back in the opposite direction okay and you can use this this knowledge right to your advantage and trade the trend reversal how you do it is is this right you want to look for the market that has moved more than one point one point five times ATR into key market structure so what I mean by this is let’s say for example market is in range okay market is here and at this point in Makkah is closed over here let’s say again let’s talk about euro dollar average 100 pips a day and let’s say today euro dollar has moved 200 pips right bullish candle smack into this area of resistance you know the at this point right there is a high probability of reversal because number one euro dollar came into resistance number two it has you know exceeded its daily ATR by more than 1.

5 times and I’m a tree if you can get some form of a confirmation like a shooting star bearish pinbar and stuff like that it really right would sweeten the deal and you know give you a high probability of you know trading this reversal so let me share with you a few examples again so moving on to the charts okay so let’s have a look at this one it’s nest day alright the nest egg recently we have a very steep sell-off right so again let’s look at a monthly timeframe okay so this this concept can be applied whether you’re trading off the daily weekly or monthly right it’s it can be applied the same so if you look at Nasdaq right pay attention to this candle over here the most this bearish one if you look at this this range of this okay let me just move over here right at this point right this is the current ATR value which is about let’s make it four seventy five five four hours and five points on me instead so this means that on average or each month the Nasdaq tends to move about you know 475 500 points so the next candle right you have this canned over here so this candle right the range of this candle is from the high to the low it’s about seven one three nine minus six three five two right so seven one three nine minus six three five two that’s about seven hundred eighty seven ninety points okay so that’s all about about more than 1.

5 times ATR for this particular month okay so this tells you that I don’t hate that this market has moved more than its usual amount right in terms of our Average True Range so what you do is then pay attention right on the lower timeframe and see if it come into you know any key market structure and if you look at the weekly timeframe you’ll notice that this market this price right at this point in time right at this point right this is where it made the UH the largest swing about seven hundred and eighty seven points on the monthly timeframe and the next can on a weekly timeframe you notice that the price has actually no break and close back above this area of support so there’s three things going for you right now number one the monthly timeframe has hit one point five times ATR it’s the first thing number two it’s at this area of support and I’m a tree you have this a bullish higher close let’s call it a higher higher closer a price rejection back above support so this tells you that there’s a good chance the market could possibly reverse higher because you have quite a number of factors right in your favor so this is what I mean by how you use the ATR indicator to so-called identify trend reversal okay in this case the market data had a quite a nice bounce one more example so let’s have a look at a copper futures so same thing okay okay so has a bit okay let me just find a better better chap maybe this may be a CFD one one might be a smoother thought it sounds okay so you can see over here same thing find out what is the ATR value my ATR loves to play hide-and-seek right come out come out wherever you are okay there it is so again copper look at this notice there is this key market structure here the range of this copper can know why is the ATR indicator running away okay so let me just pull it out this bugger again come on okay dear okay let me just find out the ATR value it’s about a point one three three let’s make it point one three to make it easy on myself okay so every ATR value on the weekly timeframe for copper is zero whoops zero point one three okay and find out what is the range of this particular can no over here just pick the highs minus the low and you know what is the 8th year for this particular candle okay the range is about let’s see let’s see highs about three point three one and the lowest three point zero nine so that’s the difference about twenty three cents so again it’s about more than one point five times the ATR so again if go down to the lower timeframe okay and you can notice that over here notice this right price this is the this is the range the huge burst of momentum you saw on a weekly timeframe from here to here okay so over here right there’s a price rejection on the daily timeframe number one you notice you saw earlier that day for the week right it has hitting right morning 1.

5 times ATR number two you get this resistance R number three you have this a bearish pinbar right basically a shooting star or basically a price rejection so this really you know gives you right strong rather a high probability i that the market is slightly to reverse lower because there are these three factors right coming into play all right so I hope you get my point right of what I’m trying to share over here obviously this is a cherry-pick shot I won’t be an idiot to share with you a chat right that goes against what I just teach my bear in mind whatever I shared all my youtube tutorials there will be losing treats definitely I guarantee you it okay so don’t forget that and then don’t assume that everything I share is gonna be a hundred percent win rate that is ridiculous okay so that’s a to sum up right how you identify high probability trend reversal market move one and one point five times ATR into key market structure can be a trend line support resistance right ended you know followed by a price rejection okay setting how do you set a proper stop-loss so you don’t get stopped hunt it so here’s the thing right a lot of times traders they they like to you know set their stop-loss so it just above the highs and lows of market structure let’s say D market comes down dip a little bit oh let’s go shot stop-loss above this is the next thing you know market goes up higher put its desktop loss in reverse lower okay so so what’s the lesson over here number one don’t set your stop loss just above resistance or just below support okay instead what you want to do is to give it some room to brief right what I suggest is to identified a market structure first and then set your stops away from market structure that usually right ensures that you know you won’t get you know faked out too easily and some of you don’t have a tendency to use fixed stop-loss and this is something that I don’t suggest as well two reasons why first reason is because different markets have different volatility what this means is that a 50 let’s say 100 people stop-loss might be enough for a market like dollar Canadian but a hundred people stop-loss won’t be enough for a market like Napoleon right let me let me just show this to you this is important right many times trader make no mistake of you know having a fixed stop-loss because you know it’s easy for them to calculate but doesn’t make sense so if you look at dollar Canadian daily timeframe you can see that right now okay he has about seventy five pips right as it’s a Average True Range per day over the last twenty period if you look at the market like a pound yen okay it has the ATR value of about one hundred and seventy four pips so can you see that different markets they have different volatility so this is why you know you don’t want to be using a fixed stop-loss it doesn’t make sense market they have different ranges Gd right for the forex market for a stock market is all the same another reason why you don’t a set a fixed stop-loss is because right depending on the timeframe you trade you might need a larger or smaller stop-loss again for example pound yen right daily timeframe has the ATR value of 107 475 pips whatever trading of the one-hour time frame on the but let’s say the 2 hour time frame on a pound you notice that the ATR value right now so Nemo 30 28 to 30 pips so if you would use the ATR value on a daily timeframe and apply it to the two hour time frame it’s overkill is overkill right so it’s like picking a machine gun to kill a chicken it’s overkill or it is a knife okay so bear this in mind and this is why I say that no you don’t to use a fixed stop-loss right when you are trading instead what you want to do is identify step one the market structure can be support resistance trendline pivot points whatever and then set your stops away from the market structure and how you set your stops from mocking structures you can use the ATR indicator right you can use a 180 are away 280 are away depending how we know conservative you wanna be so let me share with you a few examples okay do you know illustrate my point so euro Canadian let’s look at this one over here let’s look at the daily time frame so you can see over here this is what I’ve seen let’s say you know traders to look at this chart is it oh this resistance okay let me just draw my my level right price previous support support and resistance this is a resistance and at this point in time right look Rina there is a bearish engulfing pattern let’s go shot so they go shot where you put your stop-loss textbook says put your stop-loss above the highs but you’re smart and India so you go up and reference it above this highs then what happens mark it just come up eat your stop-loss a life and then reverse down lower which is what I just sit to you or I don’t set your stops above the highs or below the dose don’t just set no one to pips be below or above it so how do you do it right again ATR indicator this bugger went missing again so let me pull it out okay so again pull out your HR indicator find out what is the current ATR value when you are about to enter the tree so in this case the ATR value is going to make it easy let’s say 115 let’s let’s make it 100 and 115 pips so what you’ll do is just take the highs over here right and add 115 pips so in this case the highest year it’s about one five five five oh plus 115 right so pardon my math right my stop-loss will be about 156 55 okay so let’s put it at 156 sixty-five they’re about here I’ll change this to 150 665 changes to rate so in order to stop loss and there you have it right it’s enough for you to kind of swallow this this fake up as the market reverse down lower again so that’s what I’m trying to to share okay another example shall we euro Swiss franc in this case again let’s say you know what this one over here let’s say this is a gain previous support and resistance and you wanna you wanna short it because you know price that previous support 10 resistance then resistance there maybe look at this chart over here and you know hey you know it looks like a bearish engulfing pattern by price might reverse low so we go short again you can see that price do dips up higher and then continue slower so again don’t put your stop-loss just above the highs use your ATR value in this case again right just couplet what is the current ATR value let’s say it’s X okay I’m just gonna let says X find out what’s the highs over here then just pick the highs plus X and that is your stop-loss so you can you know give it give your trade right more room to brief so you don’t get stopped up by all those you know spiked up and now this one this example is using one in here but again if you want to be more conservative you can use 2x so basically two times the ATR so your stop-loss will be wider but at the same time you can swallow a deeper spike the downside to it is that your position size would be smaller so this means that your risk to reward ratio might not be as favorable alright so this is something to bear in mind okay so that’s how you set a proper stop-loss and finally how do you write massive trends in the market okay so HL indicator it’s a volatility based indicator but at the same time it can be used to write trends in the market as a volatility base trailing stop loss so let’s say for example let’s look at this is one market brain crude oil okay let’s look at that real estate weekly so in this case uh again right what you can do is it you see let see for example the brand new rockets in a downtrend prices break down lower so you can actually reference the current ATR value right and set your trailing stop loss write a multiple of it so let’s say let’s say let’s you know keep things simple at this point over here right let’s say the ATR value is four dollars and let’s say you want a trail of stop-loss right you don’t want do you know just exit the trade because the market could trend out even more so what you can do is use of volatility base stop right in use a multiple of ATR and that’s your trailing stop loss so for example let’s say use three ATR as your trailing stop loss all right this means 380 is equals to 12 dollars so from the loss over here let’s say the loss over here is uh this is $77 okay so your trailing stop loss will be at 77 minus 12 which is at $65 so this means right if the price it breaks right sorry I should be adding right since this is a down treatment so you’ll be $89 any 7 plus trip $89 okay so if the price reaches $89 it breaks above it right this is where it hits your trailing stop loss and you exit the trade so this is how you can actually use the ATR indicator to trail your stop-loss so it’s a volatility based stop-loss so this takes into consideration right what is the current volatility volatility of the market if volatility expands right the trailing stop loss will accommodate accommodate accommodate it accordingly so one little tip I have for you is that it can be tedious to manually calculate the eight-year stop-loss so what you can do is you can use an indicator called the chandelier exit chandelier stop channel exit whatever okay just pull it out and in what it does is that it will you know show you right the trailing stop loss based on each year so in this case this this pink line right is basically the the volatility based stop-loss that I’ve just shared with you earlier then I’ve calculated with you earlier just that now and you don’t have to do the calculation it’s just plot out it’s a line for you okay so we just click on this you can see you can change the time period the multiplier if you want a larger stop-loss you can use you know an ATR of them six ATR even if you want to so yeah it’s more buffer on the tree okay so I hope this is a useful indicator that you can use one one final tip that I have for you instead the larger your multiplier right the longer the trend that you’ll catch okay so let’s say for example usually if you are using you know not to ATR right usually a short-term trend for ATR you’re right medium term trend and it six ETR and above rise is usually long term trend so depends on your your trading goal right what type of trends you want to capture right and you will use the respective multiplier on the ATR but in this case are you can make your life easier by using the chandelier exit indicator which is just a variation of the HR indicator but more for you know drilling your stop-loss okay so with that said uh what we’ve covered you know quite a bit so let’s do a quick recap number one how to identify no explosive breakout traits about to about to occur right if the weekly ATR is a multi-year low value right something big is about to happen so watch the price action if he breaks out of key market structure right you can use multiple time frame right to enter the trade right and potentially right the big move number two if the market has moved more than 1.

5 times ATR into a key market structure like support or resistance right beware is that the market could possibly reverse so if you want to confirm the reversal you can use you know basic reversal candlestick patterns like shooting star hammer etc I’m a tree you want to set your stop loss away from market structure don’t just put it above the heights of resistance of below support it’s asking for trouble alright I’ve shared with you that it’s very easy to have your stops trigger instead right set instead do do this thing right number one identify the market structure and number two set your stop loss away from market structure how much a way you can use the ATR indicator to help you with it and finally you can use the ATR indicator to write massive trends in the market to make your life easier does this indicator called the chandelier exit right it will perform the same thing as the ATR indicator just that you don’t have to manually calculate it okay Anna right now if you want to learn more about you know what I do my trading strategies and techniques okay you can go down to my website over here trading with Rainer calm okay depending on your the trend following then download this our ultimate trend following that you learn how to you know write massive trends in the market and profit in bull and bam kids click this orange button right and I’ll send it to your inbox for free if you wanna learn more about price action trading support resistance market structure candlestick patterns then this guide is for you the ultimate guide to price action trading again it’s free just click on this right and I’ll send it to your inbox for free okay so with that’s it I’ve come towards the end of this video you enjoyed it hit the thumbs up button subscribe to my youtube channel below and any feedback comments leave it below and I’ll do my best to help so that’s it I wish you good luck and good trading I’ll talk to you soon you


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