Investing & Trading

Average Percent True Range Study

By Samantha Baltodano


TL;DR:

The Average Percentage True Range (APTR) is a technical indicator that measures volatility using percentage values instead of absolute ones, allowing for comparison across different securities. It uses true range as the principal variable and smoothes it with a moving average, defaulting to Wilder's smoothing but with the option for Hull, simple, exponential, or weighted average. The APTR can be applied to a single symbol, with high volatility accelerating it and low volatility keeping it flat.



What Is The Average Percent True Range Study?

The Average Percentage True Range (APTR) is a technical indicator proposed by Vitali Apirine. Because it is a modification of the well-known J. Welles Wilder, Jr.'s Average True Range (ATR), it shares ATR's purpose of measuring volatility. 


On the other hand, the APTR measures it in another dimension: using percentage values instead of absolute ones allows comparing volatility of different securities.


Much like the standard ATR, the percentage version uses true range as the principal variable. In the APTR, the true range is divided by its own middle value, which yields the target percent ratio. This ratio is then smoothed by a moving average of the specified type, Wilder's smoothing being the default. You can also use a Hull, simple, exponential, or weighted average.


While the possibility of comparing the true range based volatility across different securities is characteristic of APTR, it may be equally useful when applied to a single symbol. High volatility is supposed to accelerate the APTR, while low volatility tends to keep it almost flat at a moderate level.



Test The Average Percent True Range Study

Great news! 


You can back test this exact strategy on historical data for any of your favorite symbols using TradingView. 


This strategy has already been built and all you have to do is log in and take it for a spin. You can access this indicator here.


If you’re new to back testing and to TradingView, don’t worry. I created a step-by-step guide you can follow to begin testing the Average Percent True Range Study.



Summary

  • The Average Percentage True Range (APTR) is a technical indicator that measures volatility using percentage values.
  • It's based on J. Welles Wilder Jr.'s Average True Range (ATR) and allows for comparison of volatility across different securities.
  • True range is the principal variable, with the ratio smoothed by a moving average (defaulting to Wilder's but with options for Hull, simple, exponential, or weighted).
  • The APTR can be applied to a single symbol, with high volatility accelerating it and low volatility keeping it flat.


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