Relative ATR Indicator For MT4

Relative ATR Indicator For MT4

Table Of Contents:

  1. Relative ATR Indicator For MT4
  2. Trading ideas with the Relative ATR Indicator For MT4
  3. Interpreting the indicator line plotted by theRelative ATR Indicator For MT4
  4. Using theRelative ATR Indicator For MT4to place Trailing Stop Loss
  5. Relative ATR Indicator For MT4 - Buy Entries
  6. Relative ATR Indicator For MT4 - Sell Entries
  7. Relative ATR Indicator For MT4 - Conclusion

The Relative ATR Indicator For MT4 is an indicator which uses the Average True Range indicator to calculate and show the ATR relative to the actual market sentiment of the underlying asset with a colour legend. When it is predominantly green then the market has a net ATR value that is bullish and when it is predominantly red then the market has a net ATR value that is bearish. ATR does not directly calculate volatility however it is positively and sensitively correlated to the changes in market volatility.

FREE Relative ATR Indicator

Download the FREE Relative ATR Indicator for MT4.

To receive my email 100% sure: 
Put my email on your whitelist!

Partially Automated Trading Besides Your Day Job

Alerts In Real-Time When Divergences Occur

My Recommended MT4/MT5 Broker


Trading ideas with the Relative ATR Indicator For MT4



From the screenshot in the section above, it is visible that besides the fact that the relative ATR calculate the Average True Range relative to the actual market sentiment of the underlying asset and the standard ATR calculates the standard Average True Range of the market, the Relative ATR is plotted as a line that changes colour while the ATR’s line does not change colour.

The other difference to note is that the vertical scale of the standard ATR indicator reads in values between 0 and 1 while the vertical scale of the Relative ATR Indicator For MT4 reads in values between 1 and 100. The difference is because in the standard ATR the values are divided by 100 while in the Relative ATR Indicator For MT4 they are not.

For this guide, we shall use a white background and maintain the colour settings of the Relative ATR Indicator For MT4.



Just like the standard Average true range (ATR), the Relative ATR Indicator For MT4 also measures the market volatility. It uses a series of true range indicators and a 14 day MA in its algorithm.

The oscillating line shows how much the prices of the underlying financial asset moves on average during a given timeframe.

However, it is worth noting that the Relative ATR Indicator For MT4 is NOT A TREND INDICATOR and it, therefore, does not help in identifying the current market trend. To identify the current trend in the market, you should use a trend indicator like the moving averages or any other that you are comfortable with.


Interpreting the indicator line plotted by theRelative ATR Indicator For MT4


Just like the standard ATR indicator, the Relative ATR Indicator For MT4 will spike very high when the market of the currency pair you are trading opens and then most of the remaining day declining in swings that indicate how much the market price is moving on of the timeframe you have selected. The reason as to why it spikes when the market opens is because the market volatility is usually at its highest then.

If for example, you are using the H1 timeframe, the Relative ATR Indicator For MT4 will show how much the market price is moving on average each hour. That way you can be able to determine how far the market price will have either depreciated or appreciated in the next couple of hours. You can do the same with any other time frame be it M1, M5, M15, M30, H4, D1, W1, or MN depending on your trading strategy.

Here is an example:
Let us say you are using the H1 timeframe and the relative ATR Indicator For MT4 is at 33.3697 along its vertical chart-scale. That indicates that the market prices are moving at a rate of 33.3697 per cent per hour.

If you use a trend indicator to determine the market trend and identify that the market is bullish and place a BUY trade, you can be able to calculate how far the market will have moved up within the next hour and thus be able to place a take profit at that price level.

On the other hand, if you have a trading strategy that already gives you where to place your take profit and stop-loss levels, you can determine the amount of time the market will take to hit either of the levels by dividing the difference between the current market price and the stop levels by the value of the relative ATR Indicator For MT4. That way, you can decide whether to manually close the order after that time has passed or to wait longer.

You are probably wondering what about the colour changes on the indicator line? When the indicator line is green, it shows that the market is trending and there is significant movement in market prices. When the indicator line turns red, it shows that the average movement of the market prices is too little.

You should therefore trade when the relative ATR Indicator For MT4 line is green and avoid trading when the line is red.


Using theRelative ATR Indicator For MT4to place Trailing Stop Loss


To manage the risk of trading, after placing your take profit level, you can use the relative ATR Indicator For MT4 to place a trailing stop loss to enable you to lock the profits that you will gain and exit the market immediately the market starts moving against you.

Normally, a trailing stop will adjust your stop loss level to lock the gains that your trade makes after the market moves by the specified pips.

To place the trailing stop, you should use the reading of the relative ATR Indicator For MT4 as the number of pips for the trailing stop.


Relative ATR Indicator For MT4 - Buy Entries


To be able to place any trade using the relative ATR Indicator for MT4, you should use an additional indicator for determining the market trend. In this guide, we shall use the Simple Moving Average (SMA) to determine the market trend.

To place a BUY order, you should wait for the Simple Moving Average (SMA) to move below the candlesticks/bars, which is a sign that a bullish trend has started. Before placing the BUY order you should ensure that the colour of the relative ATR Indicator for MT4 indicator line is green. Secondly, you should check the reading of the indicator to be able to calculate where to place your take profits and trailing stop levels.




Relative ATR Indicator For MT4 - Sell Entries


To place a SELL order, you should wait for the Simple Moving Average (SMA) to move above the candlesticks/bars, which is a sign that a bearish trend has started.

Before placing the SELL order you should ensure that the colour of the relative ATR Indicator for MT4 indicator line is green. Secondly, you should check the reading of the indicator to be able to calculate where to place your take profits and trailing stop levels.




Relative ATR Indicator For MT4 - Conclusion


By using this guide, you can now be able to effectively use the relative ATR Indicator for MT4 to determine how the market prices of the currency pair or commodity you are trading is moving so as to forecast how far it shall have moved within a specific timeline.

One this that is important to remember is that the relative ATR Indicator for MT4 is NOT A TREND INDICATOR. Therefore, you should have a strategy or indicator that allows you to determine the market trend. You cannot use the relative ATR to determine the market trend.

 

About Me

I'm Mike Semlitsch the owner of PerfectTrendSystem.com. My trading career started in 2007. Since 2013 I have helped thousands of traders to take their trading to the next level. Many of them are now constantly profitable traders. 

The following performance was achieved by me while trading live in front of hundreds of my clients:

Connect With Me:  

Results From 5 Months!
This service starts soon! Be the first who get's notified when it begins!

This FREE Indicator Can Transform
Your Trading!

FREE Indicator + Telegram Group


Request the Ultimate Double Top/Bottom Indicator which is used by 10,000+ traders.