ATR (14) — Average True Range

What it measures¶

A session's true range is its high minus its low — widened to include any gap from the previous session's close, so an overnight jump counts. The Average True Range is the average of the true range over 14 sessions, smoothed the way J. Welles Wilder defined it in 1978. It is in the share's own price units: an ATR of 2 means the price has typically spanned about 2 currency units a day.

Why it is on the page¶

It is the standard unit of volatility — how much the price moves — and has no direction: a rising ATR means bigger daily ranges, up or down. The Technical page uses it to price its stop levels (see 1R and stop levels), and the Price & timing strip's Volatility tile uses it divided by the price (ATR %).

Thresholds, their source and the population they were fitted on¶

ATR has no zones: in price units, the same value is large for a low-priced share and small for a high-priced one. To compare shares, divide it by the price — that is ATR %.

• Source: J. Welles Wilder, New Concepts in Technical Trading Systems (1978).
• Fitted on: no population — a measurement.
• Evidence grade: not graded.

A worked example¶

An illustration, not a stored figure: a share closing at 50 whose last 14 sessions spanned on average 1.20 between high and low, gaps included, has an ATR(14) of 1.20 — an ATR % of 2.4%. A stop placed two ATRs below the close would sit 2.40 lower.

What “No verdict” means here¶

ATR carries no verdict and no vote. The row reads insufficient data until 15 daily bars are stored.

What the verdict is and is not¶

The figure describes how much the price has been moving. It says nothing about which way, it is not a forecast, and it is not an instruction to trade the shares.