Volatile markets? Use Average True Range indicator to minimize risk

The minimum return should be double the risk involved. ATR facilitates in identifying such stocks by studying the entry and exit levels.

The stock market undergoes various phases that traders and investors analyse to maximize profits. The major phases are accumulation, growth (mark-up), and distribution phase. To analyse these phases, market participants majorly understand the volatility, thus reducing the risks involved. Average True Range (ATR) assists in recognizing the effect of volatility and helps to take advantage of unexpected movement. It is a technical indicator that measures market volatility.

The Average True Range is calculated by measuring the difference in current high, current low, and the previous close. Usually, a 14-day period is considered while arriving at an ATR. The basic