The average true range (ATR)The average true range (ATR) is an indicator that measures t... More is an indicator that measures the of the marketWhat are value stocks? A value company is a company that app... More. Compared to other indicatorsIn technical analysis, an indicator is a tool that collects ... More that focus on volatilityWhat is price volatility? Volatility is the price fluctuatio... More, the ATR will show it as an absolute number instead of a percentage.
If the ATR is rising, volatility is increasing; when it is falling, the volatility is decreasing.
ATR is a valuable tool to identify . This can be done by adding or subtracting (multiples) of the ATR to the entry priceWhat are value stocks? A value company is a company that app... More.
It is based on the true range, or TR, which is defined as the largest of the following:
- Difference between the largest high and the largest low
- The absolute value of the current high minus the latest close
- The absolute value of the current low minus the latest close
In the standard setting, the average of 14 periods of the TR is now used to derive the ATR.
