MA-ATR

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Author: Copyright ? 2006, Balidev Software Corp.
MA-ATR

Overview of the MA-ATR Indicator Logic

This script is designed to provide visual traders with a dynamic way to assess market trends and volatility simultaneously. It functions by creating a "channel" around the price action, using a combination of moving averages and volatility measurements.

Core Components

1. The Trend Foundation (Moving Average) The first step the script takes is calculating a Moving Average (MA). This represents the "baseline" or the smoothed average price of an asset over a specific period. The logic allows for four different types of smoothing:

  • Simple Moving Average (SMA): A basic average of prices.
  • Exponential Moving Average (EMA): Gives more weight to recent price action.
  • Smoothed Moving Average (SMMA): A slower, more balanced smoothing method.
  • Linear Weighted Moving Average (LWMA): Applies a linear weighting so that the most recent data points have the highest impact on the average.

2. The Volatility Measurement (ATR) To determine how wide the "channel" should be, the script utilizes the Average True Range (ATR). Unlike a moving average which tells you where the price is going, the ATR tells you how much the price is swinging. It measures the range of movement (volatility) over a set number of bars.

3. The Dynamic Envelope Construction The primary logic of this script lies in how it combines the items above to create a visual envelope:

  • Upper Bound: The script takes the Moving Average baseline and adds the volatility value (ATR multiplied by a user-defined factor) plus the current market "spread" (the difference between the buy and sell price).
  • Lower Bound: The script takes the Moving Average baseline and subtracts that same volatility value.

How it behaves on your chart

Instead of just seeing a single line representing the average price, this script draws a visual corridor.

  • When the market is calm (low volatility): The ATR value is small, causing the upper and lower bounds to tighten closer to the Moving Average.
  • When the market is volatile (high swings): The ATR value expands, pushing the upper and lower bounds further apart to account for the increased "noise" in the price action.

Summary of Functionality

By interpreting this logic, a user can see not just the general direction of the market (via the Moving Average), but also the "normal" boundaries of price movement based on current conditions. If the price stays within these lines, it suggests the market is behaving according to its current volatility; if it breaks out significantly, it may indicate a shift in market sentiment or a breakout of historical volatility.

Indicators Used
Indicator of the average true rangeMoving average indicator
Miscellaneous
Implements a curve of type %1
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MA-ATR 
//+------------------------------------------------------------------+
//|                                                       MA-ATR.mq4 |
//|                         Copyright ? 2006, Balidev Software Corp. |
//+------------------------------------------------------------------+
#property copyright "Copyright ? 2006, Balidev Software Corp."
#property link      "http://www.balidev.com/"

#property indicator_chart_window
#property indicator_buffers 5
#property indicator_color1 Red
#property indicator_color2 SlateGray
#property indicator_color3 SlateGray
#property indicator_color4 Aqua
#property indicator_color5 Aqua

//---- indicator parameters
extern int MA_Period=2;
extern int MA_Shift=0;
extern int MA_Method=0;
extern int ATR_Period=100;
extern double ATR_Factor=1;
extern int ATR_Shift=0;
extern bool ATR_UseMAOnArray=false;
extern int ATR_MAOnArrayPeriod=3;
extern int ATR_MAOnArrayMethod=MODE_EMA;
extern int ATR_MAOnArrayShift=0;
extern int MaxBar=1000;

//---- indicator buffers
double MA_Val[];
double MTR_Top_Val[];
double MTR_Btm_Val[];
double MTR_AvgTop_Val[];
double MTR_AvgBtm_Val[];
int myBar;

//----
int ExtCountedBars=0;
//+------------------------------------------------------------------+
//| Custom indicator initialization function                         |
//+------------------------------------------------------------------+
int init()
  {
   int    draw_begin;
   string short_name;
//---- drawing settings
   SetIndexStyle(0,DRAW_NONE);
   SetIndexShift(0,MA_Shift);
   if (!ATR_UseMAOnArray) {
      SetIndexStyle(1,DRAW_LINE);
      SetIndexShift(1,MA_Shift);
      SetIndexStyle(2,DRAW_LINE);
      SetIndexShift(2,MA_Shift);
      SetIndexStyle(3,DRAW_NONE);
      SetIndexStyle(4,DRAW_NONE);
   } else {
      SetIndexStyle(3,DRAW_LINE);
      SetIndexShift(3,MA_Shift);
      SetIndexStyle(4,DRAW_LINE);
      SetIndexShift(4,MA_Shift);
      SetIndexStyle(1,DRAW_NONE);
      SetIndexStyle(2,DRAW_NONE);  
   }
   IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS));
   if(MA_Period<2) MA_Period=13;
   draw_begin=MA_Period-1;
//---- indicator short name
   switch(MA_Method)
     {
      case 1 : short_name="EMA(";  draw_begin=0; break;
      case 2 : short_name="SMMA("; break;
      case 3 : short_name="LWMA("; break;
      default :
         MA_Method=0;
         short_name="SMA(";
     }
   IndicatorShortName(short_name+MA_Period+")");
   SetIndexDrawBegin(0,draw_begin);
   SetIndexDrawBegin(1,draw_begin);
   SetIndexDrawBegin(2,draw_begin);
   SetIndexDrawBegin(3,draw_begin);
   SetIndexDrawBegin(4,draw_begin);   
//---- indicator buffers mapping
   SetIndexBuffer(0,MA_Val);
   SetIndexBuffer(1,MTR_Top_Val);
   SetIndexBuffer(2,MTR_Btm_Val);
   SetIndexBuffer(3,MTR_AvgTop_Val);
   SetIndexBuffer(4,MTR_AvgBtm_Val);

//---- initialization done
   return(0);
  }
//+------------------------------------------------------------------+
//|                                                                  |
//+------------------------------------------------------------------+
int start()
  {
   myBar = MaxBar;
   if (myBar > Bars)
   {
      myBar = Bars;
   }
    
   if(myBar<=MA_Period) return(0);
   ExtCountedBars=IndicatorCounted();
//---- check for possible errors
   if (ExtCountedBars<0) return(-1);
//---- last counted bar will be recounted
   if (ExtCountedBars>0) ExtCountedBars--;
//----
   switch(MA_Method)
     {
      case 0 : sma();  break;
      case 1 : ema();  break;
      case 2 : smma(); break;
      case 3 : lwma();
     }
//---- done
   /* calculate the atr envelope */
   for (int i = 0; i < myBar - (ATR_Period + ATR_Shift); i++)
   {
     double spread = (Ask-Bid);
     double atr = iATR(NULL, 0, ATR_Period, ATR_Shift + i);
     MTR_Top_Val[i] = MA_Val[i] + (atr * ATR_Factor) + spread;
     MTR_Btm_Val[i] = MA_Val[i] - (atr * ATR_Factor);
   }

   /*if (ATR_UseMAOnArray) {
      for (i = 0; i < myBar - (ATR_Period + ATR_Shift + ATR_MAOnArrayPeriod + ATR_MAOnArrayShift); i++) {
        MTR_AvgTop_Val[i] = iMAOnArray(MTR_Top_Val, ATR_MAOnArrayPeriod + i, ATR_MAOnArrayPeriod, i, ATR_MAOnArrayMethod, ATR_MAOnArrayShift);
        MTR_AvgBtm_Val[i] = iMAOnArray(MTR_Btm_Val, ATR_MAOnArrayPeriod + i, ATR_MAOnArrayPeriod, i, ATR_MAOnArrayMethod, ATR_MAOnArrayShift);
      }
   }*/

   return(0);
  }
  
  
//+------------------------------------------------------------------+
//| Simple Moving Average                                            |
//+------------------------------------------------------------------+
void sma()
  {
   double sum=0;
   int    i,pos=myBar-ExtCountedBars-1;
//---- initial accumulation
   if(pos<MA_Period) pos=MA_Period;
   for(i=1;i<MA_Period;i++,pos--)
      sum+=Close[pos];
//---- main calculation loop
   while(pos>=0)
     {
      sum+=Close[pos];
      MA_Val[pos]=sum/MA_Period;
	   sum-=Close[pos+MA_Period-1];
 	   pos--;
     }
//---- zero initial bars
   if(ExtCountedBars<1)
      for(i=1;i<MA_Period;i++) MA_Val[myBar-i]=0;
  }
//+------------------------------------------------------------------+
//| Exponential Moving Average                                       |
//+------------------------------------------------------------------+
void ema()
  {
   double pr=2.0/(MA_Period+1);
   int    pos=myBar-2;
   if(ExtCountedBars>2) pos=myBar-ExtCountedBars-1;
//---- main calculation loop
   while(pos>=0)
     {
      if(pos==myBar-2) MA_Val[pos+1]=Close[pos+1];
      MA_Val[pos]=Close[pos]*pr+MA_Val[pos+1]*(1-pr);
 	   pos--;
     }
  }
//+------------------------------------------------------------------+
//| Smoothed Moving Average                                          |
//+------------------------------------------------------------------+
void smma()
  {
   double sum=0;
   int    i,k,pos=myBar-ExtCountedBars+1;
//---- main calculation loop
   pos=myBar-MA_Period;
   if(pos>myBar-ExtCountedBars) pos=myBar-ExtCountedBars;
   while(pos>=0)
     {
      if(pos==myBar-MA_Period)
        {
         //---- initial accumulation
         for(i=0,k=pos;i<MA_Period;i++,k++)
           {
            sum+=Close[k];
            //---- zero initial bars
            MA_Val[k]=0;
           }
        }
      else sum=MA_Val[pos+1]*(MA_Period-1)+Close[pos];
      MA_Val[pos]=sum/MA_Period;
 	   pos--;
     }
  }
//+------------------------------------------------------------------+
//| Linear Weighted Moving Average                                   |
//+------------------------------------------------------------------+
void lwma()
  {
   double sum=0.0,lsum=0.0;
   double price;
   int    i,weight=0,pos=myBar-ExtCountedBars-1;
//---- initial accumulation
   if(pos<MA_Period) pos=MA_Period;
   for(i=1;i<=MA_Period;i++,pos--)
     {
      price=Close[pos];
      sum+=price*i;
      lsum+=price;
      weight+=i;
     }
//---- main calculation loop
   pos++;
   i=pos+MA_Period;
   while(pos>=0)
     {
      MA_Val[pos]=sum/weight;
      if(pos==0) break;
      pos--;
      i--;
      price=Close[pos];
      sum=sum-lsum+price*MA_Period;
      lsum-=Close[i];
      lsum+=price;
     }
//---- zero initial bars
   if(ExtCountedBars<1)
      for(i=1;i<MA_Period;i++) MA_Val[myBar-i]=0;
  }
//+------------------------------------------------------------------+

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