The The average true range (ATR) is an indicator that measures t... More is an indicator that measures the of the What are value stocks? A value company is a company that app... More. Compared to other In technical analysis, an indicator is a tool that collects ... More that focus on What 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 What are value stocks? A value company is a company that app... More.. This can be done by adding or subtracting (multiples) of the ATR to the entry
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.