there are over 10, 000 indicators you canadd to your chart at any given time and out of all of those indicators thesingle best one on the planet doesn't even try to tell you if prices goinglong or short doesn't even care gangster and I gave it away in thethumbnail it's the ATR it's the average true range which if I were to have tenthousand traders guess which one it was going to be none of them would havepicked the ATR and if you've ever used it you are very surprised by this answerin terms of what the best Forex indicator on the planet actually is solet's get right into it guys in this video I'm gonna explain how the ATRworks and just what it is and what it does and then why you should be using it100% of the time there should not be a single trade that you make withoutconsulting the ATR first that is why it is the number one trading indicator onthe planet because every single trader on earth should be using it no otherindicator can say that about now I wanted to make this video kind of laterbut I push this to the front a little bit because as you guys know a lot ofyou know I host something called the Forex q and a podcast and what it isif you're unfamiliar is listeners will ask me a question they'll go tono-nonsense forex.
com slash ask VP and I answer them as quickly as I canvia email now some of those questions and making the show and that's that'show the show is created from listeners like you asking me questions now thevery first episode I made episode 1 went over the top four questions I alreadyget just on the street you know anywhere out in public in a bar you knowacquaintances that I get when people discover what I do just for the purposeof you not having to ask me a question like that and then you could ask mesomething different if you wanted to so that was constructive I think but whatturned out happening is once I open this up for questions the number onequestion I got that I probably get over 50% of the time as of right now is whatare the indicators that you use in your algorithm so people know that I use analgorithm which is not as daunting as it sounds it's actually very simple oflet's say four to six indicators that I follow and if they all tell me to golong I go long if they all tell me to go short I go short and that's how I dowhat I do and they want to know what they are you know screw all thislearning how to trade nonsense just tell me what you use and I'll just use thatand make a bunch of money the answer is no every timestop asking there's no way I'm giving my algorithm away to anybodyit took three blown accounts thousands of hours coming home and testing allthese goofy indicators with on all different settings on all different timeframes and all different currency pairs to get to the combination I have rightnow and if you think I'm just going to give it away to you because you askedyou're insane you're bold and I do commend you for this hey I'm not mad atyou for asking this question fortune favors the boldnothing favours the timid so good on you for being bold but if you think you'regetting any piece of this you're wrong until today I didn't even realize thatthe ATR was a piece of this algorithm and I'll explain why in a minute but itis something I use on every single trade I just for some reason didn't count itas part of what's on my chart but you'll understand why in a moment first offlet's just really quickly go over what an algorithm is because I want all ofyou over time to have one for yourself like I said it's not math II it's it'snot it has nothing to with algebra I suck at both I really really suck atalgebra it's just a series of things by definition that must be true or untruebefore something actually happens so in a trading sense for me it's a series ofindicators that actually must all agree with each other every single one mustsay hey VP on this currency pair it is time to go long or it is time to goshort if even one of them is indecisive or tells me to go the other way then Ido nothing I move on I don't have to trade all the timenow as far as how I set up my algorithm, or the indicators within it really it's allof them attempt to avoid trading where the big banks trade you know if you'veseen my videos before you understand this how important it is to stayunpopular and to avoid those hotspots where everybody else is putting inorders because that's where the big banks like to take things the oppositeway of where you intended this is how losses happen for most people and butall things considered even though I'm staying unpopular I still want them toget me in and out of a trade at the best possible times but before any of thathappens I actually have to know how much to risk first that's why I have toconsult the ATR and the reason this whole time I forgot it was part of myalgorithm is because I already have X amount of indicators on my chart as is Idon't really want to add one more so I just pretty much put it on my chart justto see where the numbers and then I immediately take it off but it isabsolutely part of my trading system and technically part of my algorithm and isthe only piece of it I am willing to divulge but it is the most importantpiece because it is the most important indicator out there because understandeverybody wants that one indicator that one standalone indicator that is justamazing at predicting where price will go and that indicator doesn't exist youneed a combination of indicators that confirm each other so you can reallydrill down in those absolute best times to go long or go short but the ATR whatmakes it the best it's the one because it is the one indicator everyone shouldbe using I've said it before guys that is what makes it the best because thishere does not exist this here absolutely does and everybody needs to use it thisis not to answer people want to hear because there is nothing sexy about thisindicator everybody chases the sexy stuff this is dead unsexy nobody wantsto hear about it they want the indicator that gets theminto that big trend earlier calls that perfect reversal you know they have notime for something that does not do either one of those things we will getoff of this picture but the ATR is crucial for moneymanagement and money management is crucial to winning if you guys have notseen the money management video I made it's just a very short video kind ofkicking off the money management playlist that this video is also goingto be on go watch it it is the one thing most responsible for your tradingaccount going up or going down and the ATR is the most important indicator whenit comes to money management yet another reason why this thing is so importantand why it is at the very very top of my list so let's go ahead and talk about itand tell you what it is it's about time to do that huh the Average True Rangeall it does is tell you how many pips a particular currency pair has moved onaverage in the past X amount of candles so the default settings for the ATR onmost platforms is 14 so in the past 14 candles on average from top to bottomhow many pips does this thing move that's it the end all right and so I'mgonna go to my charts in a second here I'm gonna show you how to set it up anda little more about it before I do that though here's the way I describe tradeentries in terms of how much money to put on a trade okay I don't I don'tspeak in units I don't say put 10, 000 units on the euro dollar to go long Idon't say that I don't say in dollar amounts either I don't say put 4, 500 onthe pound kiwi to do this I I don't I say how much are you trading per pipwhat is your pip value to me that's the best way to speak in money managementterms and that's from this point forward that's how you're gonna hear me talk soI don't speak in lots either because a lot on one lot on the euro dollar isright now is 10 dollars a pip but if you're gonna trade the Euro Pound forexample which is one of the charts we're going to look at one lot does not equal$10 a pip so what I really care about in terms of how to determine how much riskto put on any given trade I will say how much money per pipare you trading what is your pip value all rightso now that that is clear let's go ahead and go to the charts and I'll show youthe ATR all right so here we are at the Euro Pound and I use this one as a goodexample because it mu typically moves very slow compared to most currencypairs so I also have waited to the very end of the day this is the end ofthe trading week so nothing is moving now for you you are gonna want anaverage of let's just say fourteen candles you want fourteen completedcandles so if you are a daily chart trader like I am and in Episode three ofthe podcast I explain why you either want to wait until the end of thetrading week if it's a Friday but if it's any other day of the week you wantto measure the ATR about I don't know 20 30 minutes before the candles about toclose now why do I say that because if you don't if you wait till an hour afterthe candle before is closed this candle is going to be very small and it's gonnathrow off the equation all right I hope that makes sense maybe it'll make moresense if we actually pull it up so average true range now the ATR comesstandard on just about every mt4 platform out there so I don't need toprovide a download link really and what I do I leave it alone some of the bestindicators out there you don't even need to mess with I do 14 periods I just keepthe same colors and lines and just hit OK and there it is and so what is theATR of the Euro Pound can anybody tell me it's right here 41 pips this linejust tells you over time what it has been you can really just ignore the linewhat I want to know is this number right here and that is it41 pips from top to bottom in the last 14 candles this has been the average nowif I were to do this you know let's say during the asian session where thingshave just kind of gotten going and things haven't been moving too much thisno is going to be lower because this candleis gonna be a lot smaller because it hasn't had the chance to really do whatits gonna do for the day so you're not gonna get the most accurate number herethat's why I recommend checking this thing right before the end of the day orif it's the weekend you can just do what I do and check it on the weekend so 41is your number there so let's go ahead and get rid of this and let's move on tosomething that moves a lot faster the pound kiwi now same thing hit OK andyou can see on this one it moves a lot more than the Euro Pounddoes doesn't it 125 pips per day if we're counting thelast 14 periods and this is a slow time of year guys this thing can easily tradeinto the 200s sometimes the 300s depending on what's going on and out ofthe 8 major currency pairs this is typically the fastest one and the EuroPound is typically the slowest one and so this is a good illustration I thinkand in terms of comparing the two and how the ATR can help you determine whatyour pip value needs to be for each one so let's go back to the slide and I'llshow you how this works so let's compare the twothe ATR of the Euro Pound we determined was 41 on the pound kiwi it was 125now I am terrible at math but I can tell you right now that one is about threetimes more than the other one is so what do we do we understand first thatcurrently the Euro Pound is moving about a third of the speed of the pound Kiwi andconversely the pound Kiwi is moving about three times the amount of the Europound alright we've established thatright so how do we trade it well pretty simple just for example if you'retrading the euro pound at $6 a pip you can with confidence and with ease tradethe pound Kiwi all you have to do is trade 1/3 less if you're putting $6 apip here you put $2 a pip here and your results are going to be very similar itseems pretty obvious to me but the vast vast majority of traders I can guarantee you are putting the same amount per pip over here than they are over here alot of you who are watching this video for the first time that's what youprobably do that is your answer to money management my question to you is whatare you doing why are you doing it that way are you sitting there telling methat you are three times as confident in this trade that you are this tradebecause whether or not you're actually saying it that's what your actions aresaying this is a very foolish and irresponsible way to trade because ifthis trade goes south on you that's gonna be a really big dent in youraccount and you should never let one loss affect your account that adverselyguys don't be one of these people do it right and you do it right by using theATR to determine numbers like this and then you can decide how much moneyactually goes where I know I keep referring back to the podcast becauseit's actually very relevant for this video but episode 4 I talked about thereason why you should be trading a lot more currency pairs than you probably doand I think one of the big reasons why people don't is because pairs like thisseem very ominous very scary because they move so much there's really noreason to feel that way because if you just put the right amount of pip valueonto it then it's just like trading anything else and this opens up yourtrading repertoire so much more because now you're giving yourself that muchmore opportunity to succeed to make money to where you are severely limitingyourself if you only trade a small handful of currencies this is how youopen things up this is how you multiply your success but only if you do it theright way if you do it the wrong way it can be the worst thing to ever happen toyou but by using the ATR and using it the right way you can trade any pair outthere you want with ease so in conclusion first off understandthat money management is the one thing that's gonna separate you from thelosing traders when it's all said and done because it is the one thing morethan anything that determines whether your bank account goes up or down andwhat's the most important tool you need when it comes to money management itthe ATR and you should have it either on your chart or ready to go ready ready totell you what the ATR is for a certain pair always 100% of the timenever ever trade without it it is that important guys now who else out there isdrilling down into Forex money management like I am nobody it's onlythe most important thing ever and people are doing you a gigantic disservice bynot talking about it more and so if you really do want to succeed you know whatto do you got to subscribe to this channel we are just getting started interms of everything yes we're also going to go over entries and how to get thebest entries to the really good sexy stuff that's all gonna be there butmoney management is something we really need to get you ironclad no doubt inanyone's mind amazing at because if we do this the rest is easyso hit subscribe hit the bell don't miss anything check out the podcast check outno-nonsense forex.
com it has everything the videos the podcasts the blog all ofit but follow a youtube channel that is dedicated to your success put it alltogether and let's go get it.
