GITNUX MARKETDATA REPORT 2024

Statistics About The Average True Range Indicator

The Average True Range indicator is a measure of volatility that calculates the average range between high and low prices over a specified period, commonly used to identify potential price movement in financial markets.

With sources from: investopedia.com, barchart.com, babypips.com, ig.com and many more

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The Average True Range (ATR) was developed by J. Welles Wilder in 1978.

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The ATR does not predict price direction but measures market volatility.

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A high ATR indicates the market has high volatility, while a low ATR shows the market has low volatility.

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ATR uses true range values and averages them over a specified time period.

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The initial ATR value was calculated as a straight average of True Range for a certain period.

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The most commonly used ATR period settings are 7 and 14.

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The ATR is commonly used in the futures markets.

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ATR is often used as a volatility measure in systems that follow trends.

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ATR was designed to solve the problems of gaps and limit moves in commodities markets.

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Wilder recommended a 14-period smoothing, originally intending the 14 days to represent two trading weeks.

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ATR does not take price direction into consideration, thus it does not truly represent a volatility measure.

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The disadvantage of ATR is that the indicator does not provide an indication of price trend.

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Some trading systems use high ATR readings as a signal to exit open positions.

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An exponential moving average (EMA) of the TR values is the final ATR calculation.

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A falling ATR may indicate narrowing ranges, reduced volatility, or a slowdown in the trend.

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Traders often use the ATR to manually calculate where to set entry orders and where to place stops and limits.

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The ATR provides a relative measure of volatility, which can help traders to assess the risk involved in a particular trade.

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In this post, we explore the Average True Range (ATR) indicator, a key tool in analyzing market volatility. Developed by J. Welles Wilder in 1978, the ATR provides valuable insights into market conditions by measuring volatility rather than predicting price direction. Traders commonly use ATR values to inform their decision-making process and manage risk effectively.

Statistic 1

"The Average True Range (ATR) was developed by J. Welles Wilder in 1978."

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Statistic 2

"The ATR does not predict price direction but measures market volatility."

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Statistic 3

"A high ATR indicates the market has high volatility, while a low ATR shows the market has low volatility."

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Statistic 4

"ATR uses true range values and averages them over a specified time period."

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Statistic 5

"The initial ATR value was calculated as a straight average of True Range for a certain period."

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Statistic 6

"The most commonly used ATR period settings are 7 and 14."

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Statistic 7

"The ATR is commonly used in the futures markets."

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Statistic 8

"ATR is often used as a volatility measure in systems that follow trends."

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Statistic 9

"ATR was designed to solve the problems of gaps and limit moves in commodities markets."

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Statistic 10

"Wilder recommended a 14-period smoothing, originally intending the 14 days to represent two trading weeks."

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Statistic 11

"ATR does not take price direction into consideration, thus it does not truly represent a volatility measure."

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Statistic 12

"The disadvantage of ATR is that the indicator does not provide an indication of price trend."

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Statistic 13

"Some trading systems use high ATR readings as a signal to exit open positions."

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Statistic 14

"An exponential moving average (EMA) of the TR values is the final ATR calculation."

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Statistic 15

"A falling ATR may indicate narrowing ranges, reduced volatility, or a slowdown in the trend."

Sources Icon

Statistic 16

"Traders often use the ATR to manually calculate where to set entry orders and where to place stops and limits."

Sources Icon

Statistic 17

"The ATR provides a relative measure of volatility, which can help traders to assess the risk involved in a particular trade."

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Interpretation

The Average True Range (ATR) indicator, developed by J. Welles Wilder in 1978, serves as a valuable tool for measuring market volatility without predicting price direction. A high ATR indicates high volatility, while a low ATR suggests low volatility in the market. Despite not considering price direction, the ATR is commonly used in futures markets and trend-following systems to manage risk and make informed trading decisions. By utilizing true range values and smoothing techniques, traders can leverage the ATR to determine entry and exit points and assess the level of risk associated with each trade opportunity.

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