Average True Range


ATR (Average True Range) - is one of the indicators of technical analysis. Used to measure volatility (mostly price volatility) of a selected stock or index (stocks, futures and other). Definition

ATR is defined for the assumed period T as the mean of the true range (TR, True Range), where TR is the highest value (as for the module) with:

The period t is the same as the candlestick on the graph (eg hourly, daytime) for calculating TR, and T is the number of candles taken to calculate the average ATR. Application

ATR is used to decide whether to seize or close a position. It is often used in transactional systems that deal with trends. A price change for a certain number of ATRs is considered to be an offside trend and may be used as a buy or sell signal.

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