ATR (Average True Range) measures how much a stock typically moves over a chosen period, usually 14 bars. It averages the true range of each bar, where true range captures the full extent of a move including any gap from the previous close. ATR is quoted in the same units as price, so an ATR of 12 on a stock means it has been swinging about 12 rupees per bar.
How traders use it
ATR is a pure volatility reading with no view on direction. Its most common use is to set exits that respect how much a stock actually moves: placing a stop-loss a multiple of ATR away from entry keeps it outside ordinary noise, so you are not shaken out by routine wiggles. The same idea scales position size, since a wider ATR implies a wider stop and therefore a smaller quantity for the same rupee risk. Rising ATR signals expanding volatility; falling ATR signals a calming market.