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Ok, so what are all of these ATR figures for? The answer is simple. The
primary purpose of knowing the ATR of the candles you are observing (i.e.
knowing the Daily average if looking at the Daily candles) is to assess the risk
and likelihood of the trades you engage to reach the success target. Later in
this eBook you will learn a variety of trading techniques, and for example,
some of them are based on the amplitudes (how tall) of the day candles. If
your stop order is placed within the range of the Daily average (AdR) then
there is a good possibility that you may get stopped out by simple market
fluctuations. Knowing the UdM, and seeing how far your stop order is in
respect to the UdM then you will know the likelihood of a rogue large day of
stopping you out (but this will happen less often). Conversely, if you are
doing a “Roulette” trade then you can similarly predict how many days your
trade might last until you either get stopped out or limit exit for
profit. Knowing the Usual Maximums and Average Range of the Weekly and
Monthly perspectives offers you similar foresight although you are less likely
to engage in trades using such large stops, thus those are mostly used to help
you to determine possible trade duration.
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