ATRlike

ATRlike is a term used to describe a family of volatility indicators inspired by the Average True Range (ATR). Like ATR, ATRlike aims to quantify the magnitude of price movement over a specified window, typically incorporating price ranges and gaps to capture true market activity. The exact definition of ATRlike can vary by source, with different smoothing methods or scaling rules used across implementations.

Calculation and variants are not uniform. A common approach follows the ATR tradition: compute a true range TR_t for each period as the maximum of (high minus low), the absolute difference between high and the previous close, and the absolute difference between low and the previous close. The ATRlike value is then obtained by smoothing TR_t with a moving average or exponential moving average. Some variants modify TR_t calculations, apply alternative normalization (for example, expressing ranges as a percentage of price), or use different averaging schemes to produce a comparable volatility measure.

Applications and interpretation involve assessing volatility rather than direction. Traders use ATRlike to gauge how actively prices are moving, to adjust position sizing, and to set stop-loss and take-profit levels based on current volatility. A rising ATRlike generally signals increasing volatility, while a declining value indicates calmer conditions. Because it relies on historical ranges, ATRlike is lagging and can be affected by gaps or illiquid markets. It is not a predictor of price direction but a tool for understanding and managing volatility within a trading strategy. See also: ATR, volatility indicators, risk management.