The Avg True Range (ATR) measures the volatility of a symbol by calculating the average range between high and low prices over a selected period. It helps identify how much the price typically moves during each time interval.

For automated trading strategies, ATR is commonly used to detect periods of high or low market volatility, which can influence when strategies should trigger trades or adjust risk.

What does the Avg True Range measure?

ATR calculates the average of true ranges over a specified number of periods. The true range considers the largest value among:

• The difference between the current high and low price
• The difference between the current high and the previous close
• The difference between the current low and the previous close

This ensures the indicator captures both intraday movement and price gaps.

In general:

• Higher ATR values indicate increased market volatility
• Lower ATR values indicate quieter market conditions

This makes ATR useful for understanding how much the price typically fluctuates.

How ATR is used in indicator-based triggers

In automation, ATR can help determine whether market movement is large enough to justify triggering a strategy.

For example, automated strategies may monitor when:

• ATR crosses above a defined value, indicating rising volatility
• ATR moves relative to another indicator, helping confirm whether price movement is expanding or contracting

These types of triggers allow strategies to respond when the market shows significant changes in volatility.