ATR DarMA is a client side VTL indicator. It plots the Average True Range (ATR) as a line and a moving average of the ATR. ATR is a volatility measure. It is primarily used for stop loss placement and take profit levels. High value of ATR indicates high volatility and low ATR value indicates lower volatility in the market. When the volatility is high, wider stop losses should be used. In low volatility situations tight stop loss can be used. The take profit levels can be adjusted to the levels of volatility in the market. ATR DarMA indicator applies a moving average to the ATR indicator, showing clearly ATR value is at higher levels or lower levels. The indicator plots two lines, the teal color line is the ATR and the red color line is the moving average of ATR. ATR avove its moving average indicates higher volatility in the underlying instrument and trader is advised to use wider stop loss as well as wider take profit levels. ATR below its moving average indicates low volatility market conditions and trader can use tight stop loss. Thus ATR DarMA indicator helps the trader to easily grasp the underlying volatility condition in the market. This indicator does not generate trading signals, it shows the volatility in the market.
The ATR DarMA indicator can be customized through the parameters. “ATR Period” determines the period parameter of ATR indicator. “Signal Line Period” specifies the moving average period for ATR signal line. “Signal Line Shift” parameter determines the moving average’s displacement. “Signal Line MA Method” specifies the moving average type to be used for signal line, it can be Simple Moving Average, EMA, Time series MA or Variable MA.
