what is ATR

what is ATR (Average True Range) is a crucial technical indicator in trading, providing insight into market volatility. It calculates the average range between the high and low prices of an asset over a specified period, typically 14 days. A higher ATR value suggests greater volatility. While a lower value indicates less volatility. Traders use it to determine the potential size of price movements and adjust their trading strategies accordingly. For instance, during periods of high volatility, traders may widen their stop-loss orders to accommodate larger price swings. While in low-volatility environments, tighter stop-loss orders may be appropriate. Understanding how to interpret values is essential for traders to effectively manage risk and optimize their trading strategies. By incorporating into their analysis, traders can make more informed decisions and adapt to changing market conditions with greater confidence.