Welles Wilder ATR Bands

Last modified 15:30, 21 Apr 2015

Average True Range Bands

 

Average True Range Bands (Welles Wilder) are envelopes consisting of support and resistance lines of the Average True Range (Welles Wilder).

Average True Range Bands are useful for determining whether current values of a data field are behaving normally or breaking out.

For example, when the closing price of a security increases above its upper ATR Band, it will typically increase in that direction.

The bands can also be used to signal entries — when used in conjunction with a trend filter.

 

Method of Calculation

 

The Average True Range is calculated in accordance with J. Welles Wilder's formula.
The default ATR period is 21 days, with multiples set at 3 x ATR

The default settings used to calculate the ATR Bands may be configured via the Properties window.


Parameters

WWatrprop.png

ATR Periods: The previous periods averaged to produce the ATR(WW)

ATR Multiplier: The multiple to be applied to the ATR(WW) periods

Add/Subtract using:

  • Close: The bands are calculated by Adding/Subtracting a multiple of 3x Average True Range to the daily Close price.
  • High/Low option, the default multiple of 3x Average True Range is added to the daily Low, and subtracted from the daily High.

Plots

WWatrplot.png

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.

 

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