Trends/Volatility and bands

Average true range

The average size of a bar's range, including gaps, over the last 14 bars.

Volatility and bandsBest on 3M, 6M, 1YAlso called ATR

Illustration of the average true range shape. It is a sketch, not real price data.

What it shows

J. Welles Wilder's average true range measures how much a stock moves in a bar. The true range of a bar is the largest of three numbers: high minus low, high minus the previous close, and previous close minus low. The ATR is a smoothed average of those over 14 bars.

It is in price units, not percent. A larger ATR means bigger bar-to-bar moves.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

True range = the largest of (high − low), |high − previous close|, |low − previous close|.
First ATR = average of the first 14 true ranges.
Each next ATR = (previous ATR × 13 + current true range) ÷ 14.
Plot it under the price.

Starting values: Length 14; Smoothing Wilder's (1/14). These are proposed and will be tuned on real price data before launch.

How to read it

The panel shows ATR over time.
A rising line means bars are getting larger.
It does not show direction.

Status labels you may see

Label	What it means
Rising	ATR is higher than 5 bars ago.
Falling	ATR is lower than 5 bars ago.
Flat	Changed under 3%.

What cancels it

Nothing cancels it.

What traders check next

ATR as a share of price.
How it compares with its own history.
What bars caused spikes.

Limits

In price units, so cannot be compared across stocks.
Smoothing lags.
Gaps raise it.

Try it in forecastviz

Open any ticker and choose Volatility and bands → Average true range in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with ATR bands and Keltner channels on the same chart.

Open on a ticker

Questions

What is a gap's role?

True range includes gaps, so overnight jumps add to ATR.

How do I compare stocks?

Divide ATR by price to get a percent.