Average True Range - ATR

Average True Range - ATR

A measure of volatility introduced by Welles Wilder in his book: New Concepts in Technical Trading Systems.

The True Range indicator is the greatest of the following:
-current high less the current low.
-the absolute value of the current high less the previous close.
-the absolute value of the current low less the previous close.

The Average True Range is a moving average (generally 14-days) of the True Ranges.

Notes:

Wilder originally developed the ATR for commodities but the indicator can also be used for stocks and indexes. Simply put, a stock experiencing a high level of volatility will have a higher ATR, and a low volatility stock will have a lower ATR.

See also: Moving Average, Technical Analysis Terms, Volatility