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What is the average true range calculation in the context of cryptocurrency trading?

avatarContreras HarveyDec 25, 2021 · 3 years ago1 answers

Can you explain in detail what the average true range calculation means when it comes to cryptocurrency trading? How is it calculated and what does it indicate?

What is the average true range calculation in the context of cryptocurrency trading?

1 answers

  • avatarDec 25, 2021 · 3 years ago
    The average true range (ATR) calculation is an important tool in cryptocurrency trading. It helps traders gauge the volatility of a cryptocurrency and make informed decisions. The ATR is calculated by taking the average of the true range values, which measure the price range of a cryptocurrency over a specific period of time. A higher ATR value indicates higher volatility, meaning that the price of the cryptocurrency is more likely to experience larger price fluctuations. This can be both a risk and an opportunity for traders. They can use the ATR to set stop-loss orders to limit potential losses or to identify potential breakout opportunities. Overall, the ATR calculation provides valuable insights into the volatility of a cryptocurrency and helps traders make more informed trading decisions.