ATR (Average True Range)

Indicator Description

ATR (Average True Range) is a volatility indicator used to measure the absolute level of market volatility. It reflects the degree of market volatility by calculating the average of the true range over a certain period.

Function Information

• Function Name: ATR
• Input Parameters: High, Low, Close
• Parameter Settings: timeperiod (default: 14)
• Output: ATR value

Calculation Principle

ATR is calculated using the following formula:

True Range = max(High - Low, |High - Previous Close|, |Low - Previous Close|)
ATR = SMA(True Range, timeperiod)

Where:

• High is the highest price
• Low is the lowest price
• Close is the closing price
• SMA is Simple Moving Average
• timeperiod is the calculation period

Usage Scenarios

1. Volatility analysis
2. Stop-loss level setting
3. Breakout confirmation
4. Trend strength assessment

Usage Recommendations

1. Larger ATR values indicate stronger volatility
2. Smaller ATR values indicate weaker volatility
3. Can be used to set dynamic stop-loss levels
4. Use in conjunction with other indicators