# Average True Range (ATR)

> StratCraft indicator page for ATR volatility measurement.

**Route**: `/indicators/atr/`

## What It Does

ATR measures market volatility by averaging the true range over a lookback period. It does not describe direction, only how much price is moving.

## Formula

`True Range = max(High - Low, |High - Prev Close|, |Low - Prev Close|)`

`ATR = SmoothedMovingAverage(TrueRange, period)` (default `period = 14`). With a different `movav`, the selected moving average replaces the smoothed average.

## Worked Example

`period = 3`, illustrative true ranges `2, 3, 4` seed the smoothed average at `3`. For the next true range `5`: `ATR = (3 × 2 + 5) / 3 = 3.67` (rounded).

## Parameters

- `period` - default `14`
- `movav` - default `SmoothedMovingAverage`

## Backtrader API

```python
import backtrader as bt
atr = bt.indicators.ATR(data, period=14)
```

## Common Usage

- Use ATR for stop-loss sizing.
- Use ATR for volatility filters.
- Combine ATR with breakout or regime logic.

## Practical Pattern

When ATR expands, the market is usually moving faster. When ATR contracts, compression may be building before a breakout.

Source: https://www.backtrader.com/docu/indautoref/