Atr indicator


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Atr indicator
The ATR indicator is an important technical analysis tool that stands for Average True Range. It measures the degree of price volatility, which is the amount of movement in the price of a security. This indicator helps traders identify trends, determine potential trading opportunities, and set stop-loss levels. The ATR indicator measures the volatility of a security by looking at the range between the high and low prices over a certain period of time. This range is measured in the form of a percentage. For example, if the high of a stock is $20 and the low is $18 over a certain period of time, the ATR would be 10%, or 2 divided by the stock’s current price of $20. The ATR indicator can also be used to determine when a security is overbought or oversold. If the ATR is high, it indicates that the security is volatile, which can lead to increased trading opportunities. Conversely, if the ATR is low, it suggests that the security is not volatile, which could lead to fewer trading opportunities. Analogies can also be used to understand the concept of the ATR indicator. For example, the ATR indicator can be thought of as a measuring tape, measuring the degree of price volatility in a security. It can also be thought of as a thermometer, measuring the heat of a security. Fun fact: The ATR indicator was first developed by the legendary technical analyst J. Welles Wilder in 1978.