OlympTrade Technical Indicator Average True Range

The ATR (Average True Range) technical Indicator shows the current volatility of an asset, i.e. it shows the average movement of an asset over a period of time.

J. Welles Wilder is the designer of the indicator and it was first introduced in his book “New concepts in technical trading systems” in 1978. This book still sells on average 36,000 copies per year. Initially, like many other indicators, the ATR indicator was created for end-of-day prices and commodity futures, which tend to be more volatile than what stocks are. This however evolved and it is now used in the Forex market and for other time periods.

Wilder, together with two partners, embarked on a project to construct 1,035 apartments in 5 cities in Virginia and North Carolina. Before completion of the apartments, his partners offered to buy out his share in the project. A fair price was agreed on and Wilder, at age 38, received $100,000. He then started studying how to trade stocks.

Wilder is now 87 years old and lives on New Zealand’s Southern Island. He describes his life in his last book “The Wisdom of the Ages in the Acquisition of Wealth.” In the book, he says he would be much wealthier than now if he had known in his youth what he wrote in this book. Wilder’s indicators are seen as the basics for many technical analysis programs and are included in most modern trading platforms:

  • Average Directional Index (Wilder’s favorite indicator)
  • RSI
  • Average True Range
  • Parabolic-Sar

ATR does not predict the direction of a price movement, but has been designed exclusively to describe an asset’s current volatility. As such, it is an additional technical analysis tool that is only useful when used together with other technical overlays and indicators. The Average True Range is therefore an auxiliary tool that can be used to analyze a financial asset.

Configuring the indicator

The indicators should be configured in a separate Technical Analysis window on Olymp Trade’s platform. The indicator can be found in the Tendencies section after “Indicators form” has been selected in the Indicators tab:

Technical Indicator Average True Range on OlympTrade
Technical Indicator Average True Range on OlympTrade
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