Average True Range (ATR) is a volatility indicator that measures the typical size of an instrument's price range over a set number of periods.
Developed by J. Welles Wilder Jr. in 1978, it captures real range including overnight gaps, and is quoted in the instrument's own price units so it plugs straight into stop and size calculations. ATR measures volatility only and gives no directional signal.
Formula / example: ATR is a smoothed average of true range, usually over 14 periods