### The ATR stock indicator - what is it, who came up with how it is calculated, what it shows.

ATR (Average True Range) is a technical indicator that is used to measure market volatility. It was developed in 1978 by Welles Wilder in his book "New Concepts in Technical Trading Systems".

**ATR calculation**

The ATR is calculated based on the difference between the maximum and minimum prices for each period (usually 14 days). Then the average value of these differences is calculated to get the Average True Range.

The calculation of the ATR begins with determining the True Range for each time period. The true range is defined as the largest of the three values:

- The difference between the maximum and minimum price for the period.
- The difference between the maximum price for the period and the previous closing price.
- The difference between the minimum price for the period and the previous closing price.

Then the average value of the true range is calculated for a given number of periods, usually 14 days. This will be the ATR for this time period.

**How to use ATR?ATR reflects the volatility of prices over a certain time period, allowing traders to determine the level of risk when trading.**

This indicator can be used to determine stop loss levels and profit limits, as well as to determine the probability of continuation or change of the current trend.

ATR can be a useful tool for traders who want to measure market volatility in order to make more informed trading decisions. For example, if the ATR shows high volatility, this may indicate a high level of risk, which means that the trader may want to set wider stop losses to protect their positions. If the ATR shows low volatility, this may indicate a low level of risk, which means that the trader may want to set narrower stop losses.

ATR can also help traders determine support and resistance levels based on current market volatility. If the ATR shows high volatility, it is likely that the support and resistance levels will be wider. If the ATR shows low volatility, then the support and resistance levels are likely to be narrower.

In addition, ATR can be used together with other indicators, such as moving averages, to help traders determine the moments of entry and exit from the market.

**ATR is a useful tool for traders who want to assess market volatility and make more informed trading decisions.**