What does it measure?
ATR smooths price ranges that account for gaps. It measures the size of movement, not its direction or a buy/sell decision.
How to read it
True range is the largest of high minus low, absolute high minus previous close, and absolute low minus previous close. TradingView uses RMA smoothing by default.
TR = max(H − L, |H − Cprev|, |L − Cprev|)Hypothetical calculation
With high=105, low=100 and previous close=98, the candidates are 5, 7 and 2, so TR=7. This is one bar’s TR, not the smoothed ATR across several bars.
Before using it
ATR is in price units, so raw comparisons across differently priced assets can mislead. An ATR-based stop distance cannot guarantee execution price or maximum loss through a gap.
Check on your chart
Keep the symbol and timeframe fixed and record your settings. Compare an updating bar with a closed bar. This exercise is not a trade recommendation.
Can two ATR values be compared directly?
ATR is expressed in price units. An illustrative ATR of 2 at a price of 100 is 2%, while ATR 2 at price 200 is 1%. Normalizing by price changes the comparison but does not turn ATR into a direction forecast or a maximum-loss guarantee. Match the length, smoothing method and timeframe, and distinguish one candle’s true range from the smoothed ATR.