Average true range indicator is a unique tool that helps the forex trader to know the rate at which items/asset moves at a given time. According to the reviews from most of the traders using the atr indicator, it is clear that the tool can help you to better your forex trade significantly. That is because the atr indicator helps to lower the losses incurred during the trading period. In this article, we shall discuss some of the various things that one should know about how atr can improve your trading.It is essential to use the atr indicator because it helps one confirm the right time to initiate the trade and determine the stop-loss order placement. 

Examining the average true range indicator

Since the atr moves as the asset's price changes, one needs to follow the prices' movement to determine the atr. one can choose to calculate atr at different times. That means you can choose to calculate the atr after every minute, hour, day, week, two weeks, and so on. Also, the tool calculates the atr very frequently to ensure the traders get updated atr. Three methods can help you to calculate the atr. The three approaches to calculate the true ranges include getting the difference between:

• Current high and previous close
• Current low minus previous close
• Current high and the current low

After getting any value,whether positive or negative, you do not need to worry. That is because many people get worried once they get a negative value. 

How the ATR help in trading decisions?

The information provided on the tool mentioned earlier helps the traders to make the right decision on whether to attempt the trade or not. 

How to use atr indicator for stop-loss?

One of the most incredible features of a good trading platform is to control the losses incurred. Using the atr indicator allows you to set the right stop-loss function to prevent you from small and huge losses. When the trade goes against your favor, a stop-loss function enables you to exit the trade until the odds favor you. When you are trading, you need to check the current ATR value. When choosing the stop loss level, ensure you select the point just below the entry price. If you realize the prices are rising in your favor, you need to continue moving the stop loss t times the atr value.

Lastly, an example of how to use atr indicator for stop loss

For instance, if you take a trade at $10 and $0.10 atr, you need to stop loss at $9.80. when the price rises to $10.20, your atr still holds at $0.10, and the trailing loss moves to $10, and the trade continues until the price falls up to the stop-loss limit.