Formula
TR = max(H - L, |H - C[t-1]|, |L - C[t-1]|)
ATR(first) = SMA(TR, N)
ATR = (ATR[t-1] * (N - 1) + TR) / NHow TraderAI calculates it
TraderAI computes the true range as the largest of: high minus low, the distance from the high to the previous close, and the distance from the low to the previous close. The first ATR is the simple average of the first 14 true ranges, then Wilder's smoothing is applied. The first value appears after 15 candles. ATR is in price units and plotted in its own pane.
Live example
How traders read it
Rising ATR shows candles getting larger and the market becoming more volatile; falling ATR shows the opposite.
Traders often place stops at a multiple of ATR so the distance matches current volatility instead of a fixed number of points.
Dividing ATR by price shows how far a typical candle moves relative to the asset's value.
Limitations
- ATR says nothing about direction.
- It is in price units, so readings cannot be compared between assets with different prices without dividing by price.
Settings and defaults
| Setting | Default | Allowed range |
|---|---|---|
| Period | 14 | 1 to 500 |
What it plots
Drawn in its own pane below the price chart, with its own scale.
| Line | Unit | Drawn as | First value |
|---|---|---|---|
| Value | Price | Line | after 15 candles |
Calculation notes
- Wilder-smoothed true range, seeded with the mean of the first true ranges. Shown in its own pane.
Questions
What is Average True Range?
Average True Range (ATR) measures how much price typically moves per candle, including gaps between candles. It describes volatility only: a high ATR means large candles, whether price rises or falls.
How does TraderAI calculate Average True Range?
TraderAI computes the true range as the largest of: high minus low, the distance from the high to the previous close, and the distance from the low to the previous close. The first ATR is the simple average of the first 14 true ranges, then Wilder's smoothing is applied. The first value appears after 15 candles. ATR is in price units and plotted in its own pane.
What are the default settings of Average True Range?
The defaults are Period: 14. You can change every setting on the live chart.
Can I use Average True Range for free on TraderAI?
Yes. Every indicator in the library can be added to the free live chart. The free plan keeps up to 2 indicators active at the same time; Pro lets you combine more on one chart.
Educational content. Indicators describe past prices; they do not predict future prices and are not investment advice.