Volatility indicators
Average True Range
Average range-based volatility over a fixed number of bars.
- Engine
- TA-Lib
- Function
ATR- Input series
- high, low, close
- Outputs
- 1
How it works
ATR averages true range values, where true range captures the largest relevant movement among the current high-low range and gaps versus the previous close. TA-Lib marks ATR as having an unstable period.
Use case
Use ATR as a volatility feature that is independent of trend direction and reflects bar-to-bar range expansion or compression.
Parameters
| Parameter | Type | Default | Bounds or options | Description |
|---|---|---|---|---|
| Time Period | integer | 14 | 1…100000 | Number of bars used to average true range. |
Outputs
| Output | Type | Description |
|---|---|---|
| ATR | number | Average True Range value for the bar. |
Reading the result
ATR measures typical recent trading range while accounting for movement between consecutive closes. It describes magnitude, not direction: a rising value can accompany either a rally, a decline, or unstable sideways movement.
The result remains in source-price units. That is useful for one instrument but can make direct comparisons across differently priced instruments misleading.
Common mistakes
- Reading positive ATR as bullish direction.
- Comparing raw values across assets without normalization.
- Ignoring provider gaps that alter the previous-close relationship.
- Assuming a volatility spike identifies the cause of the move.
DataCat workflow notes
Use NATR when a normalized range measure better fits cross-symbol analysis. Use True Range when you need the unsmoothed one-period component rather than its rolling average.