ATR Ratio
(Average True Range Ratio) is a VertexFX Client Side VTL Indicator. It plots
the ratio between a long-term ATR and a short-Term ATR.
ATR is a measurement of
market volatility, when the price trend is strong, ATR values rise and
consolidation is marked by low ATR values. ATR ratio shows the present market
volatility in relation to long term market volatility.
It is
calculated by dividing the short term ATR with Long term ATR. ATR Ratio above
one indicates the current market volatility is higher. How to Use ATR Ratio
Indicator The ATR ratio indicator does not generate trading signals, it is a
confirmatory indicator. When a new trend begins, usually the indicator value
climbs above one. Identify the direction of the trend from chart with the help
of moving averages or trend lines and then initiate trades when the ATR ratio
indicator climbs above one. The image shows a short trade setup.
After a
consolidation, price breaks below the moving average. As you can see in the
area highlighted by vertical box, price remains below the MA and ATR ratio
climbs above one. This is the ideal time to open a short trade. When the ATR
ratio falls below one and stays there, it is clearly telling that the trend has
lost momentum.
Open positions can be closed when this
happens, and wait for the next breakout. Parameters ATR Ratio can be customized
through the parameters. Long Term ATR Period and Short Term ATR period are
defined by the parameters. Default values are 7 and 49. To change the parameter
values, open the script in VTL editor by right clicking on the indicator name
in navigator and select edit. The script is now opened in the VTL editor.
Parameters
are located at the top of the script file. Change the parameter values, save
and compile. Apply again to chart for the new parameter values to take effect.
To use ATR
Ratio indicator download it from here,
then place it at VertexFX VTL directory:
C:\ProgramData\VertexFX
Client Terminals\"Company name"\VTL10\Local VTL Scripts
Then
right click on the tree and select refresh or restart your client station and
you will find under VTL local scripts in
your client terminal.