The Average True Range (ATR) measures market volatility, indicating high values may signal market bottoms while low values suggest neutral markets. It does not indicate trend direction but assesses price movement size, helping traders set stop orders based on current market volatility. The standard setting for ATR is 14 days, as used by Wilder for daily charts.

1. Chapter – 3
Average True Range (ATR)

2. Average True Range (ATR)
The Average True Range (Wilder) measures market volatility.
High ATR values may signal market bottoms, and low ATR values
may signal neutral markets.
• During more volatile markets ATR moves up,
• During less volatile market ATR moves down.
• When price bars are short, means there was little ground
covered from high to low during the day
• If price bars begin to grow and become larger, representing a
larger true range, ATR indicator line will rise.
• ATR indicator doesn't show a trend or trend duration.

4. How to trade with Average
True Range (ATR)
• ATR standard settings - 14. Wilder used daily charts and 14-
day ATR to explain the concept of Average Trading Range.
• The ATR (Average True Range) indicator helps to determine
the average size of the daily trading range.
• It tells how volatile the market is and how much does it
move from one point to another during the trading day.

5. How to trade with Average
True Range (ATR)
• ATR is not a leading indicator, means it does not send
signals about market direction or duration, but it gauges
one of the most important market parameter - price
volatility.
• Traders use Average True Range indicator to determine
the best position for their trading Stop orders - such stops
that with a help of ATR would correspond to the most
actual market volatility.