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Using ATR and Its Average to Track Volatility Changes

Article MQL5 code base
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Summary

This indicator compares the Average True Range (ATR) with an average of ATR and displays their difference as a color histogram. Yellow marks periods when ATR is above its average, while dark blue marks periods when it is below. The display is intended to make changes in volatility easier to see.

A move of ATR above its average produces a pink star and is presented as a cue to examine price action or consider a trade based on a separate signal. A downward cross accompanied by falling volatility produces a blue circle. The document describes indicator behavior, but supplies no performance results, trading rules for entries or exits, or evidence that the markers predict profitable moves. It is therefore a volatility confirmation aid rather than a complete strategy. The implementation depends on an external smoothing library, and the source is described as a port from an earlier MQL4 version.

Key ideas

  • The histogram compares ATR with its average to visualize relative volatility.
  • Yellow indicates ATR above its average, while dark blue indicates ATR below it.
  • An upward cross is marked with a pink star for further price-action review.
  • A downward cross with declining volatility is marked with a blue circle.
  • The indicator alone does not specify a complete trading strategy or establish performance.

Tags

VolatilityTechnical indicatorsForex

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.