Get this indicator here (.mq4)
ATR Ratio is the ratio between fast Average True Range (ATR) and slow ATR.
ATR ratio often reaches high values after quick and strong price movements. Low indicator values often correspond with long flat periods that can be observed on the market tops, and during consolidation. It can be intepreted according to same rules as other volatility indicators.
In case the indicator value climbs above the silver horizontal line, it is time to buy or sell. Significant price movements occur when the ATR ratio is above this horizontal line of value 1.
High ATR ratio price levels often correlate with high volatility. Low ATR ratio price correlates with low volatility, as the prices stabilize or move along the channel flat movement up to the possible breakout point.
We feel that this indicator should not be used as the only or primary criteria for entering trades, but it is very useful as a filter to keep you out of consolidating or ranging markets. If you have a trend following system, try adding on the ATR ratio indicator as a filter.
Please comment below and let us know what other indicators can work together with this one.
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