Definition
Average True Range (ATR) is a technical indicator that shows how much a stock’s price moves on average over a period of time. It helps traders understand the volatility of a stock, meaning how the price goes up and down.
Example
If a stock’s price usually moves between Rs 95 and Rs 105 in a day, the range is Rs 10. If this movement stays similar over several days, the ATR may be around Rs 10, showing the stock has moderate volatility.
Caution
ATR does not show the direction of the price (up or down); it only shows how much the price is moving. A high ATR means higher volatility, while a low ATR means lower volatility. It should be used along with other indicators for better analysis.