Average True Range - ATR

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS 'Average True Range - ATR'

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.

RELATED TERMS
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth ...
  2. Wide-Ranging Days

    A description of the price range of a stock on a particularly ...
  3. Outside Days

    A term employed by market technicians and day traders. Outside ...
  4. Inside Days

    A charting term used by technical analysts and day traders. Inside ...
  5. Volatility

    1. A statistical measure of the dispersion of returns for a given ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
Related Articles
  1. Trading Strategies

    Using Compound Indicators To Predict ...

  2. Active Trading

    Range Bar Charts: A Different View Of ...

  3. Forex Education

    Range Trade Forex With Non-U.S. Dollar ...

  4. Mutual Funds & ETFs

    Surf's Up With Filtered Waves

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center