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How to use Average True Range (ATR) to measure volatality

Average True Range (ATR) is an indicator developed by J. Welles Wilder. It is design to measures volatility. ATR is calculated based on 14 days. Its formula is

Current ATR = [(Prior ATR x 13) + Current TR] / 14
  - Multiply the previous 14-day ATR by 13.
  - Add the most recent day's TR value.
  - Divide the total by 14
Unlike MACD or RSI that give you buy or sell signal. ATR indicator is a unique way to measure the volatility of the stock. You can use ATR to measure the enthusiasm behind a move , reversal or breakout. You can use ATR show strong buying pressure or strong selling pressure and confirmr the interest or disinterest in a move of stock price.
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