Индикатор ATR (Average True Range)

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AptarGroup, Inc. (ATR)

Previous Close 96.75
Open 96.49
Bid 93.59 x 900
Ask 95.63 x 800
Day’s Range 93.59 — 97.17
52 Week Range 87.40 — 126.20
Volume 24,883
Avg. Volume 338,086
Market Cap 6.08B
Beta (5Y Monthly) 0.74
PE Ratio (TTM) 25.93
EPS (TTM) 3.66
Earnings Date Apr 29, 2020
Forward Dividend & Yield 1.44 (1.49%)
Ex-Dividend Date Jan 27, 2020
1y Target Est 115.29
Fair Value

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Company Profile

265 Exchange Drive
Suite 100
Crystal Lake, IL 60014
United States
815 477 0424
http://www.aptar.com

Sector : Consumer Cyclical
Industry : Packaging & Containers
Full Time Employees : 14,000

AptarGroup, Inc. provides a range of dispensing, sealing, and packaging solutions primarily for the beauty, personal care, home care, prescription drug, consumer health care, injectable, and food and beverage markets. The company operates through three segments: Beauty + Home, Pharma, and Food + Beverage. The Beauty + Home segment primarily sells pumps, closures, aerosol valves, accessories, and sealing solutions to the personal care and home care markets; and pumps and decorative components to the beauty market. The Pharma segment supplies pumps and metered dose inhaler valves for respiratory ailments, such as asthma and chronic obstructive pulmonary diseases in pharmaceutical market. The Food + Beverage segment offers dispensing and non-dispensing closures, elastomeric flow control components, spray pumps, and aerosol valves to the food and beverage markets. It also manufactures and sells elastomeric primary packaging components for injectable market, which include stoppers for infusion, antibiotic, lyophilization, and diagnostic vials; and pre-filled syringe components, such as plungers, needle shields, tip caps and cartridges, and dropper bulbs and syringe plungers. AptarGroup, Inc. sells its products through own sales force, as well as independent representatives and distributors in the United States, Latin America, and Asia. The company has a strategic partnership with PureCycle Technologies LLC to develop ultra-pure recycled polypropylene into dispensing applications. AptarGroup, Inc. was incorporated in 1992 and is headquartered in Crystal Lake, Illinois.

Forex Training Group

There are several different class of indicators that a trader can utilize. And based on the specific goal, such indicators can help in the overall decision-making process. Most traders are familiar with momentum based indicators such as RSI and Stochastics.

But there are also other types of indicators that are based on volume, volatility, cycles, or some other measure. In this lesson, we will discuss a specific trading indicator that measures the volatility of a currency pair. It is called the Average True Range indicator, commonly referred to as ATR.

What is the ATR Volatility Indicator?

The Average True Range is a single line indicator that measures volatility. The indicator was originally developed by J. Welles Wilder to measure the volatility of commodities within the futures market. ATR does not measure price trends or price direction like other common indicators like the MACD or the Momentum indicator. Instead, the ATR indicator simply shows when volatility is high and when it is low.

This is an enlarged view of the ATR Indicator, which is usually attached in a separate window to the bottom of your chart. The single line of the ATR indicator fluctuates within a range. High prints of the ATR line indicate that the market is experiencing high price volatility. On the other hand, depressed ATR levels imply that the price volatility within the market is relatively low.

Traders can use the prints of the ATR line to consider entry and exit points based on price volatility. When volatility is high, Forex pairs are likely to be dynamic and faster moving. In contrast, low volatility is associated with a quiet market or consolidation period.

Although the ATR indicator is not as widely used by retail traders as some other momentum based indicators, it serves an important purpose for volatility conscious traders who are interested in gauging the current level of volatility or trying to anticipate potential price breakouts. Experienced traders are aware that markets move from periods of low volatility to high volatility and back again constantly. As such, the ATR is an invaluable trading tool for those that can appreciate this ebb and flow within the market.

Average True Range Calculation

To calculate the Average True Range, you will first need to identify the True Range of the period on the chart.

To discover the True Range on the chart, you should do three calculations and take the one that gives the highest value:

(High of the Current Period) – (Low of the Current Period)
(Current Period High Absolute Value) – (Close of Previous Period)
(Current Period Low Absolute Value) – (Close of Previous Period)

The highest result from these three formulas gives you the actual True Range on the chart. When you get the True Range, you should simply average the values for the period on the chart. The average calculation is done using an Exponential Moving Average on the values.

Fortunately, most trading platforms offer the ATR indicator as a tool and will calculate these values automatically. So, it is not necessary to do all these calculations yourself, however, it is important to understand how the indicator is composed so you can use it most effectively. The default Average True Range formula uses a 14-period EMA indicator. However, you can manually adjust the period taken into consideration. The indicator then recalculates based on the new input.

ATR Volatility Analysis

As we touched upon earlier, the ATR indicator can be used to perform volatility analysis on the chart. The Average True Range tells you when volatility is high and when it is low. One of the best applications of the ATR volatility indicator is that it can help you to place your stop loss order in a manner which is consistent with current market conditions. Basically, it will help you to avoid placing stops too tight during high volatility periods and placing stops to wide in low volatility periods.

In addition, it can assist you in setting higher probability take profit points. For example, If the ATR has a relatively high reading, you might consider staying in the trade for a bigger target on the expectation that the increased volatility can lead to a larger favorable price move.

In the example above you see the EUR/USD chart for February 2020 – February 2020 with an ATR indicator attached at the bottom. The red arrows on the ATR indicator point to times when the values are relatively high, which is associated with high price volatility. Notice, the large volatile candles on the upper price chart at these corresponding times.

Contrary to this, when the ATR readings are low, the market is relatively quiet as it has entered a period of low volatility. Candles are small, price action is calm, and the EUR/USD is consolidating rather than moving directionally. When the volatility is low, you can adjust your Stop Loss orders tighter. At the same time, your targets should be smaller as well, since the price is not expected to move much.

The ATR indicator can also be used to project future tendencies. If you notice that the ATR line is steadily trending upwards, then you can assume that volatility is likely to remain high. And for a steady down sloping ATR, we can expect continued range-bound type environment in the near future. At the same time, you should be on the lookout for a transition from low to high volatility or high to low volatility to prepare you for a change in market condition.

MT4 ATR Indicator

The ATR indicator is built into the MetaTrader 4 trading platform – the most commonly used Forex trading terminal. To activate the MT4 ATR indicator you should simply go to Insert > Indicators and choose Average True Range. The indicator then attaches to your chart with its default average setting – 14-period Exponential Moving Average.

If you want to change this setting, you should simply drag the mouse cursor to the indicator at the bottom of your chart and click the right mouse button. Then you would choose “ATR(14) Properties…”, which will bring up the following pop-up window:

Then under the “Parameters” tab, you will see a field named “Period.” Simply change the default “14” value to your preferred setting. The new settings of the MT4 ATR indicator will be applied automatically.

Practical Application of Average True Range

Since ATR is primarily a price volatility study, it cannot be used as a standalone tool for trading the market. You will use it in combination with your trading methodology to fine tune your entry, stop loss placement, and profit target.

One of the most effective ATR strategies is one that includes price action analysis and a Trailing Stop Loss order based on an ATR value. You can use price action patterns as entry signals on the chart. These could be chart patterns, candle patterns, trend lines, trend channels, etc.

Stop Loss Placement

One you have entered into a trade, you can use an ATR based trailing stop. The point is to use the value from the Average True Range indicator to determine the distance you want to trail the price. When the price action moves in your favor afterward, the stop loss will also move along with price taking into account the distance you have set from the current price.

But, if the price action moves contrary to your trade, the ATR Trailing Stop will stay still. As such, an ATR trailing stop will help provide for a looser stop as prices moves in the direction of your trade, allowing you to extract the maximum amount from the market when there is a persistent trend.

There is a simple rule to determine a Stop Loss within an ATR trade management approach. If the ATR indicator line is in the upper half of the area, you can consider the currency pair as relatively volatile, putting a looser Stop Loss order in the market. If the ATR is giving a value that is located in the lower half of the indicator, then you can use a tighter Stop Loss order, since the price is relatively less volatile than normal.

Setting a Target

Now we will discuss some simple guidelines for managing your exit using the ATR indictor. If the ATR line is in the upper half of the indicator during your trade, you can consider multiplying the minimum potential of your pattern by 2. This means that you can try and hit a target twice the usual for the pattern. You may want to use a scale out method when doing this or decide to exit the full position at the bigger target.

On the other hand, if the ATR line is in the lower half of the indicator, then you may want to only target the minimum potential of the pattern. The same idea is in force if the ATR line is steadily trending upward or downward. If you enter a trade where the ATR is in the lower half, but the line is trending upward, you can still consider the double target option on the chart.

Let’s say the price breaks a triangle pattern in the bullish direction. As a result, you decide to buy the respective Forex pair on the assumption that the price is increasing. The triangle pattern rules state that you should stay in the market for a minimum price move equal to the size of the pattern. However, if the ATR is giving you high values at this time, you may consider staying in the trade for a price move equal to twice the size of the triangle target. As an option you could exit half your position on the original target and close the other half at the second target.

In some cases, the patterns or trade setups may not have a calculated target. This is when the ATR Trailing Stop comes into play. With this, you would simply hold the trade as the price is trending in your favor and exit when the Trailing Stop Loss order gets hit.

Example of Trading with ATR and Price Action

Now let’s take a look at an ATR based trade management strategy in action.

We are now looking at the H1 chart of the GBP/USD Forex pair for July 5-14, 2020. The image shows an example of an ATR trading strategy where a long trade is opened when a bullish breakout occurs through the upper level of a range. Notice that we have marked the middle level of the ATR indicator at 0.0039 in order to bisect the upper and the lower part of the indicator.

The blue horizontal lines on the price chart mark the range of the GBP/USD. The blue horizontal line in the ATR area shows the ATR line at the middle level.

Notice that the ATR line breaks the middle level and shifts into the upper half of the indicator. However, the price is still located in the horizontal channel. Later, the price breaks the range through the upper level, giving us a long signal. The ATR line is in the lower half of the indicator at this moment. Therefore, you could buy the GBP/USD with the initial idea that you will pursue the minimum target of the pattern equal to the size of the range.

But on the way up we see that the ATR line starts trending upward. At the same time, we see that the line moves in the upper half of the indicator a few times. This gives sufficient reason to believe that the GBP/USD volatility is increasing. Therefore, you have the option to extend your target by using the x2 rule. You should also adjust your ATR Trailing Stop Loss as shown on the image.

Then you could hold the trade until the price reaches 2x the size of the range, shown with the two magenta lines.

The first red arrow indicates the distance between the adjusted Trailing Stop and the entry price. The GBP/USD price decreases by this level right after the 2x target is reached on the chart. The second arrow you see at the end of the chart shows the moment when the price would have hit the ATR Trailing Stop if you had not already closed the trade.

Let’s see the power of the ATR Trailing Stop with another example.

This time we have the H4 chart of the EUR/USD for May – June 2020 where we give an example of a closed trade using the ATR Trailing Stop.

The chart begins with a bearish channel. Suddenly, the price of the EUR/USD breaks the bearish channel through the upper level during relatively low ATR prints. You could buy the EUR/USD at this moment, placing a Trailing Stop Loss order under the previous bottom on the chart as shown on the image – about 90 pips distance.

The price tests the already broken upper channel level and bounces upward on sharply increasing ATR values. As such you could adjust the distance of your Trailing Stop to contain the volatile price action in a better way. You could measure the distance between the breakout point and the low of the previous bearish channel and apply the parameter as a new pip distance for your Trailing Stop Loss – about 140 pips.

The price action creates a couple of strong bullish impulses before hitting the Trailing Stop. See that after the first impulse the price creates a correction that nearly hits the Trailing Stop (red arrows). However, the Stop Loss order is well positioned, and it sustains the pressure. If you haven’t adjusted the distance of the Trailing Stop on the volatility increase, the Stop would have been hit, putting you in a position to likely miss the next sharp impulse. After the second impulse, the price action starts a general consolidation where the Trailing Stop eventually gets hit.

This is a channel breakout trade which has no specific target rules. This is when the Trailing Stop comes in most handy. Also, there are cases when you want to scale out rather than go for the full target, which is another case when the Trailing Stop can be useful. Just don’t forget to loosen and tighten the ATR Trailing Stop based on values shown on the ATR indicator.

Conclusion

  • ATR stands for Average True Range. It was developed by a famous technical analyst named J. Welles Wilder
  • The ATR is an indicator that measures price volatility, originally designed for commodity trading.
  • High ATR values indicate high volatility. Low ATR values imply that volatility is relatively low.
  • The indicator consists of a single line that fluctuates around a range.
  • The ATR Calculation is as follows:
    • The Average True Range formula involves the initial calculation of the True Range on the chart, where you should take the highest value of these three formulas:
      • (High of the Current Period) – (Low of the Current Period)
      • (Current Period High Absolute Value) – (Close of Previous Period)
      • (Current Period Low Absolute Value) – (Close of Previous Period)
    • Then you plot an Exponential Moving Average to get the Average True Range.
  • Using ATR in trade management allows you to set better Stop Loss orders and targets:
    • When ATR indicator is high, volatility is high:
      • Set looser Stop Loss orders.
      • Set bigger targets.
    • When ATR indicator is low, volatility is low:
      • Set tighter Stop Loss orders.
      • Set smaller targets.
  • You can find a built in ATR indicator in the MetaTrader4 platform: Insert>Indicators>Average True Range
    • The default ATR value takes into consideration a 14 period EMA. To change the value of the MT4 ATR indicator you should:
      • Right-click the indicator at the bottom of your chart.
      • Choose “ATR(14) Properties…”
      • Click on “”
      • In the “Period” field replace the default “14” by the period you want to include.
  • An ATR strategy could combine price action analysis and a Trailing Stop:
    • Open trades based on price action events or patterns.
    • Set a tight Trailing Stop if the ATR shows lower values. Set a loose Trailing Stop if the ATR shows higher values.
    • If a chart pattern has a certain target:
      • On lower ATR values hold the trade until the minimum pattern potential is acheived.
      • On higher ATR values hold the trade for 2x the minimum pattern potential and consider scaling out half at 1X target and half at 2X target.
    • If the pattern has no specific target rules:
      • Hold the trade until the Trailing Stop is hit.
  • Note that the Trailing Stop based on an ATR value could be adjusted periodically as needed based on market conditions.

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Average True Range — ATR Definition

What is Average True Range — ATR?

The average true range (ATR) is a technical analysis indicator that measures market volatility by decomposing the entire range of an asset price for that period. Specifically, ATR is a measure of volatility introduced by market technician J. Welles Wilder Jr. in his book, «New Concepts in Technical Trading Systems.»

The true range indicator is taken as the greatest of the following: current high less the current low; the absolute value of the current high less the previous close; and the absolute value of the current low less the previous close. The average true range is then a moving average, generally using 14 days, of the true ranges.

Key Takeaways

  • Average true range (ATR) is a technical indicator measuring market volatility.
  • It is typically derived from the 14-day moving average of a series of true range indicators.
  • It was originally developed for use in commodities markets but has since been applied to all types of securities.

Calculating Volatility with Average True Range

The Formula For ATR Is

The first step in calculating ATR is to find a series of true range values for a security. The price range of an asset for a given trading day is simply its high minus its low. Meanwhile, the true range is more encompassing and is defined as:

How To Calculate ATR

Traders can use shorter periods than 14 days to generate more trading signals, while longer periods have a higher probability to generate less trading signals. For example, assume a short-term trader only wishes to analyze the volatility of a stock over a period of five trading days. Therefore, the trader could calculate the five-day ATR. Assuming the historical price data is arranged in reverse chronological order, the trader finds the maximum of the absolute value of the current high minus the current low, absolute value of the current high minus the previous close and the absolute value of the current low minus the previous close. These calculations of the true range are done for the five most recent trading days and are then averaged to calculate the first value of the five-day ATR.

What Does Average True Range Tell You?

Wilder originally developed the average true range (ATR) for commodities, but the indicator can also be used for stocks and indices. Simply put, a stock experiencing a high level of volatility has a higher ATR, and a low volatility stock has a lower ATR. The ATR may be used by market technicians to enter and exit trades, and it is a useful tool to add to a trading system. It was created to allow traders to more accurately measure the daily volatility of an asset by using simple calculations. The indicator does not indicate the price direction; rather it is used primarily to measure volatility caused by gaps and limit up or down moves. The ATR is fairly simple to calculate and only needs historical price data.

The use of the ATR is commonly used as an exit method that can be applied no matter how the entry decision is made. One popular technique is known as the «chandelier exit» and was developed by Chuck LeBeau. The chandelier exit places a trailing stop under the highest high the stock reached since you entered the trade. The distance between the highest high and the stop level is defined as some multiple times the ATR. For example, we can subtract three times the value of the ATR from the highest high since we entered the trade.

Average true range can also give a trader an indication of what size trade to put on in derivatives markets. It is possible to use the ATR approach to position sizing that accounts for an individual trader’s own willingness to accept risk as well as the volatility of the underlying market. (For a detailed example on how to use ATR for this purpose, read our article, Sizing A Futures Trade Using Average True Range.)

Example Of How To Use ATR

As a hypothetical example, assume the first value of the five-day ATR is calculated at 1.41 and the sixth day has a true range of 1.09. The sequential ATR value could be estimated by multiplying the previous value of the ATR by the number of days less one, and then adding the true range for the current period to the product. Next, divide the sum by the selected timeframe. For example, the second value of the ATR is estimated to be 1.35, or (1.41 * (5 — 1) + (1.09)) / 5. The formula could then be repeated over the entire time period.

Limitations Of ATR

There are two main limitations to using the average true range indicator. The first is that ATR is a subjective measure — meaning that it is open to interpretation. There is no single ATR value that will tell you with any certainty that a trend is about to reverse or not. Instead, ATR readings should always be compared against earlier readings to get a feel of a trend’s strength or weakness.

Second, ATR also only measures volatility and not the direction of an asset’s price. This can sometimes result in mixed signals, particularly when markets are experiencing pivots or when trends are at turning points. For instance, a sudden increase in the ATR following a large move counter to the prevailing trend may lead some traders think the ATR is confirming the old trend; however, this may not actually be the case.

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