## Average True Range

The **Average True Range (ATR)** is a measure of volatility developed by J. Welles Wilder and introduced in his book, *New Concepts in Technical Trading Systems* (1978). The indicator does not provide an indication of price direction or duration, simply the degree of price movement or volatility.

According to Wilder, high **ATR** values often occur at market bottoms following a “panic” sell-off. Low **Average True Range** values however are often found during extended sideways periods, such as those found at tops and after consolidation periods.

#### Method of Calculation

The calculation of the **Average True Range** is similar to the Average Range indicator's in that it first measures the difference between the **High** and **Low** price of the interval (the range), but the **ATR** also looks to the previous interval's price to ascertain the "true" range.

#### User Settings

##### Period for Averaging

The user can set the number of previous true ranges that will be averaged to produce the average true range for a given interval.

Type in a whole number in the **Periods** text box in the **Parameters** tab of the **Average True Range Properties** dialog box.

The default number of periods is 20, this setting will use all the true ranges of the previous 20 periods and average them to produce the **Average True Range** for the current interval.

##### Display

The **Average True Range** is displayed in an indicator window below the price chart.

The exact display of the plot is controlled on the **Plots** tabbed page of the **Average True Range Properties** dialog box.

The **Style** selected for the plot can be one of the following: **Solid, Dashes, Dots, Points, Histogram** or **Step**.

Once the style is selected the **Color, Weighting** and **Visibility** can also be controlled from this page.

The **Scale's** display is controlled from the **Scale Settings** and **Scale Appearance** tabbed pages.

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- Using Indicators
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