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Average
True Range
Description
The
True Range indicator is defined by Wilder to be
the greatest
of the following for each period:
-
The
distance from today's high to today's low.
-
The
distance from yesterday's close to today's
high.
-
The
distance from yesterday's close to today's
low.
The
Average True Range is simply the average
of the true ranges over the past x
periods (where x
is specified by the user).
Interpretation
In
his book, New Concepts In Technical Trading
Systems, Wilder defines a trading system that
uses the Average True Range.
He also provides details on calculating the
Average True Range and the trading system.
The
Average True Range also can be interpreted using
the same techniques that are used with the other
volatility indicators.
Refer to the discussion on Standard
Deviation for additional information on
volatility interpretation. |
