What is ATR Average True Range?

market volatility indicator, derived from the 14-day simple moving average, Shows average range prices swing for an investment over a specified period default 14 days.

HOw it works?

ATR takes into account **gaps in price movement and previous closing prices** to account for price gaps

new average true range is calculated e**very day on a daily chart** and** every minute on a one-minute chart.**

**he Average True Range (ATR) Formula **

**ATR = (Previous ATR * (n – 1) + TR) / n**

**Where:**

ATR = Average True Range

n = number of periods or bars

TR = True Range

The True Range for today is the greatest of the following:

- Today’s high minus today’s low
- The absolute value of today’s high minus yesterday’s close
- The absolute value of today’s low minus yesterday’s close

**How To Calculate The ATR**

calculation of ATR range is 14-period based, To calculate the current average **true range**, you need to calculate the prior ATR and current TR. The current TR is the** highest number of three true ranges.**

- Current high minus current low.
- Current high minus the previous period’s close.
- Current low minus the previous period’s close.

The ATR Indicator formula:

**Current ATR = ((Prior ATR x 13) + Current TR) / 14**

HOW to use ATR indicator?

its mesures only volatlity, The ATR is typically set to 14 periods which means that the **ATR looks at the range of candlestick size over the last 14 candlesticks.**