Live Nifty Chart
In this article of live nifty chart, we discuss about Average True Range study. Average true range is developed by J. Welles Wilder which is a measure of volatility. ATR is initially developed for commodity segment as commodities are high volatile stocks compared to equity stocks. Moreover, ATR deals with gap ups and gap down which is most common in commodities trading than that of live nifty charts
* ATR only reveals the volatility of the trend but not the direction on live nifty chart
* For instance, when price of a stock moves up, ATR might move down.
* As well, if ATR moves up, there are chances for the stock or nifty intraday to move down.
* In general, Average true range is calculated based on 14 periods which means minimum 14 previous periods will not have ATR.
* One previous period ATR is also used to smoothen the value obtained
* Current ATR = [(Prior ATR x 13) + Current TR] / 14
* Calculate the previous 14 days ATR
* Divide the previous 14 days ATR by 13
* Most recent period ATR to be added for smoothening purpose
* Divide the total value by 14 (as the value taken in this case is 14 periods)
* ATR can be calculated for intraday, daily, weekly or monthly basis on live nifty chart
* Average true range values can not be compared between two stocks as low value stocks have low ATR and high value stocks have high ATR.
* To conclude, ATR are to be used individually for each stock or solely on nifty intraday chart. Also, it can be used to predict the direction of the stock like other indicators, stochastic oscillator or Relative stength Index
Posted on: 2016-11-08 10:34:23 Updated on: 2016-11-08 10:34:23