ATR Ratio Indicator
The ATR Ratio indicator for MT5 displays the rise and fall of the instrument’s volatility. Non-repaint Indicator!
Description
The ATR (Average True Range) Ratio indicator for MetaTrader 5 is a volatility-based indicator that is commonly used to determine whether volatility is increasing or decreasing in a financial market.
It analyzes market volatility by comparing the difference between the fast and slow ATR of an asset during a trading session.
The indicator has a purple line that fluctuates in a horizontal band depending on the increase or decrease in market volatility.
What does the ATR tell you?
The ATR indicator essentially displays the range that an asset has been in during a trading period, which can be used to predict the future movement of an asset. However, the ATR Ratio indicator works differently because it helps you easily identify when the market is experiencing an increase or decrease in volatility.
How to trade with the ATR Ratio indicator for MT5
The image above shows the effect of the ATR Ratio indicator on the EURUSD pair. The indicator determines the rate of change in price volatility by the level of the purple oscillator line on the blue horizontal bar of the indicator.
Therefore, high volatility in the market is signaled by the intersection of the purple line above the blue horizontal line. Conversely, low market volatility is depicted when the purple line is below the horizontal blue line.
The indicator cannot be used to determine trade entry or exit prices like a regular ATR indicator showing a trading range offset by an instrument that is normally used to enter/exit trades. This is because this technical indicator (ATR) works differently, fluctuating up and down as market volatility rises or falls.
However, you may be looking for a buy or sell opportunity when the purple line is above the blue horizontal line, indicating strong bullish/bearish pressure.
Conclusion
The ATR Ratio indicator for MT5 is very useful in the financial trading industry because volatility is one of the main conditions that a forex trader needs to consider before making a trade decision.