Average True Range [ATR]

Creator: J. Welles Wilder

Default period: 14

There are two lines plotted below the chart in the ATR indicator. 

1 – Green line represents the Average True Range

2 – Red line represents the Average of the ATR

The true range is defined as the maximum of (current high – current low, current low – previous close, current high – previous close).

Average True Range refers to the average price of true range over the last several candles.

The 14-day ATR is a measure of the average true range over the past 14 days. It is used to measure the volatility of any financial instrument.

Rising ATR line indicates the volatility of the instrument is increasing and falling ATR line indicates that the volatility is reducing.  

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.