News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/Vc0ZzB38Jq
  • (Market Alert) Australian Dollar Pops on RBA as Taper Plan is Left Alone, Now What? #AUD $AUDUSD #RBA https://www.dailyfx.com/forex/market_alert/2021/08/03/Australian-Dollar-Pops-on-RBA-as-Taper-Plan-is-Left-Alone-Now-What.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/FiZoavEg5e
  • RT @KyleR_IG: "We need to boost confidence. So we should stimulate. But maybe people will know we are trying to boost confidence. And then…
  • $AUDUSD popping on the #RBA The central bank will continue to buy A$5b/week of bonds until early September, then tapering to 4b until at least mid-Nov Traders likely unwinding bets that the RBA could have reversed prior decision on asset purchases https://t.co/crmIIsaEaR https://t.co/vwJs7fwzr9
  • RBA: Sees gradual pickup in wages growth, underlying inflation. Sees some increase in unemployment rate in near-term -BBG
  • RBA: GDP to decline in September quarter, experience shows economy bounces back quickly. Economy still expected to grow strongly again next year -BBG
  • RBA: Condition for rate rise will not be met before 2024, sees Australia growing 'little over' 4% in 2022 -BBG
  • RBA sticks with taper plan -BBG #AUD $AUDUSD
  • 🇦🇺 RBA Interest Rate Decision Actual: 0.1% Expected: 0.1% Previous: 0.1% https://www.dailyfx.com/economic-calendar#2021-08-03
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.72%, while traders in France 40 are at opposite extremes with 78.97%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/9u54wDvyGc
Stop Placement with Average True Range (ATR)

Stop Placement with Average True Range (ATR)

Thomas Long, Course Instructor

Identifying and limiting your risk are keys to long term success.  However, where we place that protective stop is another matter.  The problem is that a 100 pip stop on the EUR/GBP is not the same as using a 100 pip stop on the GBP/JPY.  The volatility of the two pairs is quite different and can also change from week to week.  So we need to find a tool that gives us a way to quantify the current market environment in each currency pair to determine our stop level.  One such tool is the ATR or Average True Range.  A simplified explanation of the ATR is that it measures the range of a session in pips and then determines the average range of a certain number of sessions.  For instance, if using a daily chart with a default value of 14, the ATR will measure the average daily range, from high to low of the previous 14 days.  This way you are getting a current reading on the volatility of a specific currency pair.  The current 14 day ATR for the EUR/GBP is about 72 pips while the same 14 day ATR for the GBP/JPY is more than twice that amount at about 166 pips.  So we can see why a standard 100 pip stop is not the best way to determine your risk on every trade.  Many traders will simply use the ATR for their risk.  They would place their stop 72 pips from their entry in a EUR/GBP trade or 166 pips from their entry in a GBP/JPY trade.  This is one way to base your risk on the reality of the current market you are trading which can increase your chance of success.    

atr

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES