Quick Definition

Average True Range (ATR) is a technical analysis indicator used to measure market volatility by decomposing the entire range of an asset price for that period.

Formula

Examples

• 1A stock with increasing ATR values over several days indicates rising volatility, which might suggest a potential price breakout.
• 2In forex trading, a currency pair showing a high ATR could signal large price movements, useful for setting stop-loss orders.
• 3Day traders use ATR to assess the risk and potential profit margins by comparing the ATR value with the asset's current price.

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