Average True Range IndicatorThe average true range indicator (ATR) was first introduced by J. Wells Wilder in his book New Concepts For Technical Trading Systems. The indicator measures volatility in the market. It was originally developed to help trade the Commodity market but has been used for stocks, indexes, Forex and anything else that is trade able. The average true range is the largest difference between the following Current high – current lowAbsolute Value of current High – Previous close Absolute Value of Current Low – Previous Low
The ATR is the Moving average of this range calculated over several days. It is used to determine volatility and that information can be used to judge stock movements. A high range means there is high volatility, and a market bottom is most likely coming, a low range means there is low volatility.
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