Average True Range - What is ATR

ATR Definition

The Average True Range (ATR) indicator was introduced by Welles Wilder as a tool to measure the market volatility and volatility alone leaving aside attempts to indicate the direction. Unlike the True Range, the ATR also includes volatility of gaps and limit moves. ATR indicator is good at valuating the market's interest in the price moves for strong moves and break-outs are normally accompanied by large ranges.

How to use Average True Range in trading platform.

For more information how to set the indicator in the terminal please click here.

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How to Use ATR Indicator

The ATR is used with 14 periods with daily and longer timeframes and reflects the volatility values that are in relation to the trading instrument's price. Low ATR values would normally correspond to a range trading while high values may indicate a trend breakout or breakdown.

Average True Range Indicator

Average True Range (ATR)

Average True Range Formula (ATR Calculation)

Average True Range is a moving average of the True Range which is the greatest of the following three values:

  • The distance from today's high to today's low.
  • The distance from yesterday's close to today's high.
  • The distance from yesterday's close to today's low.

How to use Average True Range in trading platform

Use indicators after downloading one of the trading platforms, offered by IFC Markets.