|By Nathan Young|
October 30, 2017
There are many indicators and tools out there and the average true range is one of the more popular. The average true range or ATR for short, is measuring the range of a particular set of data. Normalized Average True Range is trying to normalize the data and give you a consistent stream of information to base your decisions off of.
Instead of getting hung up on the normalized portion of this tool, focus on the average true range and understand what that is about. The Normalized portion is just an addition to the equation on how the data is calculated. Average true range is helping in looking at the volatility of a market rather than price. Volatility is important for those who are using options in their portfolios because you want to get a good premium in a more volatile market than one that is flat.
This particular indicator sits at the bottom of the chart and moves based on the market. You can adjust the inputs to tweak the information to your particular market timing and if you are looking long term of short term. Testing is an important aspect of any indicator and should be taken seriously. MacroAxis has many tools and research help that can point you in the right direction. Using the ATR is popular and information can be found readily.