Average True Range
Definition
A volatility indicator that measures the average range of price movement over a specified period, accounting for gaps.
Explanation
ATR was developed by J. Welles Wilder Jr. in 1978. Unlike simple range (high minus low), ATR accounts for overnight gaps by using the true range — the greatest of: current high minus current low, absolute value of current high minus previous close, or absolute value of current low minus previous close. ATR is commonly used for position sizing (risking a fixed percentage of the portfolio per ATR unit) and setting stop-loss levels.
How Stoquity Uses This
Stoquity incorporates average true range analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.
See This in Action
Explore how average true range applies to real portfolios on Stoquity.
Start Free →