# Use This Indicator to Follow The Trend

## Creating and Coding the Smoothed Normalized ATR Indicator

Volatility indicators are helpful in detecting trends. This article shows how to transform the ATR into a directional indicator and create a strategy out of it.

# Creating the Smoothed Normalized ATR (SNATR)

The average true range (ATR) is a technical analysis indicator that measures volatility in financial markets. It was introduced by J. Welles Wilder Jr. in his 1978 book, “*New Concepts in Technical Trading Systems.*” The ATR calculates the average of a security’s true range over a specified period, usually 14 days. The true range is the greatest of the following:

*The current period’s high minus the current period’s low.**The absolute value of the current period’s high minus the previous period’s close.**The absolute value of the current period’s low minus the previous period’s close.*

The ATR is the smoothed moving average of the true range calculations. By using these three values, the ATR measures the volatility of a security over a certain time period, taking into account any gaps or price movements that occur between periods. Traders can use the ATR to determine the potential size of price movements…