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7 Charting Tools for Spread Betting: A practical guide to making money from spread betting with technical analysis by Malcolm Pryor

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Tool 1 – ATR

Background and construction

ATR is one of a number of indicators which measure volatility. Volatility can be described as a measure of the state of instability. In trading, volatility is a measure of the instability of the price of a financial instrument. Traders need some volatility in the financial instruments they trade, for without it there would be no price movement to take advantage of. Having a tool to measure volatility allows the trader to adapt to varying volatility, for instance by having wider stops when volatility increases and tighter stops when volatility decreases.

ATR is short for Average True Range, a concept described by Welles Wilder in his ground-breaking book New Concepts in Technical Trading Systems. ...

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