IntroductionATR indicator is the acronim for Average True Range. This indicator was developped by J. Welles Wilder. Wilder is a american mechanical engenieer who is the father of several other technical indicators: RSI (Relative Strenght Index), ADI (Average Directional Index) and Parabolic SAR (Stop and Reverse).  ATR is a volatility indicator. Volatility is a measure of the range of price action, but ignoring the price direction. Before was used the simple concept of "Range" that is the diference between the high/low values. Range values have some leaks, not considering gaps and limited price moves. Wilder created the concept of "TR - True Range" taking in consideration this leaks changing the way of how this values are calculated. Calculating True RangeTo calculate "True Range" we use the following formula: Maximum value of this three calculations:Corrent High less current Low;Absolute value (without minus signal) of current High less previous Close ;Absolute value of current Low less previous close. Or in a simple way:TR = Max([High - Low], abs[High - previous Close], abs[Low - previous Close])And as a image worth more than 1000 words:Image 1 - Some examples of TR calculation. TR value is represented by red lines with arrows. Simple [/Low][/High][/High]…
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