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Average True Range
Posted By: TradersLog
A volatility measurement indicator introduced by J. Welles Wilder in his book: New Concepts in Technical Trading Systems. Wilder originally developed the ATR for commodities but the indicator is also be used for stocks and indices. The ATR measures a commodity or security’s volatility. High ATR values reflects high volatility while low ATR readings indicate range bound movement. True Range is defined as the largest difference of:
-current high minus the current low.
-the absolute value of the current high minus the previous close.
-the absolute value of the current low minus the previous close.
Average True Range (ATR) is a moving average of true range calculated over a series of days.
Chart courtesy of Prophet Financial Systems (www.prophet.net)
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