Average True Range (ATR)

Video Demonstration

Description

The Average True Range (ATR) is a technical analysis indicator that measures market volatility. The ATR is typically calculated using a 14-day period, but this can be adjusted based on the trader’s preference. The ATR indicator helps traders understand the average range of price movements over a given period, indicating market volatility. High ATR values indicate high market volatility, while low ATR values suggest a period of consolidation or low market volatility.

How It Works

The Average True Range (ATR) indicator measures market volatility by considering the average range of price movements over a specified period. ATR does not indicate price direction; instead, it reflects the degree of price volatility.

Formula

    //1. Calculate True Range
    double highLowVolatility = High() - Low();
    double highCloseVolatility = High() - Close(-1);
    double lowCloseVolatility = Low() - Close(-1);
    //Return the largest value
    return Math.Max(Math.Max(highLowVolatility, highCloseVolatility), lowCloseVolatility);
    //2. Sum True Range for specified period (Ex: 14 days)
    double totalTrueRange = 10.0 + 11.0 + 10.5 + ... + 10.3 + 13.3 +13.0;
    //3. Calculate Average Volatility
    double volatility = (1.0 / 14) * totalTrueRange;

Chart Settings

* For common indicator properties please see Common Indicator Settings

"Period Moving Average"
Number of periods to include in the calculation of the Average True Range (ATR).

Watchlist Settings

* For common indicator properties please see Common Indicator Settings

"Period Moving Average"
Number of periods to include in the calculation of the Average True Range (ATR).

Chart View

Last modified: 27 November 2024