3. Adding the ATR to visualize volatility
The ATR (Average True range) to visualize volatility
A first indicator we add to visualize the volatility is the ATR, the Average True Range. The ATR calculates the average daily range of the index. Currently, the FTSE moves 143 point a day as an average over the preceding 25 days.
So, if the trader sets an objective higher than 1 x ATR, he knows that he will be in position for several days. If he puts his stop at 1 x ATR the ATR or lower, chances of being stopped out are increasingly high.
