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Average true range

  • By Sharon Yamanaka,
  • Stocks and Commodities Magazine
  • Technical Indicators
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Trader, author, and technician J. Welles Wilder developed average true range (ATR) in the 1970s as a measurement of price volatility. Wilder believed that the range was directly proportional to volatility, and that range — the high and low of a stock for a given period, be it intraday, daily, weekly, or monthly — was indicative of a trend. If the volatility of a stock increased, it was entering a trend, and if it slowed down, it suggested a reversal. Read on to learn more...

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1. Active Trader Services are available to investors in households that place 120 or more stock, bond, or options trades in a rolling twelve-month period and maintain $25K in assets across their eligible Fidelity brokerage accounts.

Technical analysis focuses on market action – specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering what stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.

Article copyright 2012 by Technical Analysis Inc. Reprinted from the March 2002 issue with permission from Stocks & Commodities Magazine.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
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