What is Average True Range (ATR)?
The average size of a period's full range, used to size stops and compare volatility.
ATR averages the distance between the high and low of each period, including gaps. It is expressed in price terms, so it scales with the asset.
Traders use it to place stops at a multiple of normal noise instead of an arbitrary percentage. It is a cousin of the volatility input the model uses.
Related terms
- VolatilityTechnical analysis
How much a price swings, usually annualised from recent returns; the core input to any range.
- Trading rangeTechnical analysis
A period where price stays between a support and a resistance level.