Volatility

Average True Range

ATR

Smooths the true range (the greatest of high–low, |high–prev close|, or |low–prev close|) using Wilder's method to produce a single volatility reading in price units. Traders use it to size stops and gauge how much a market typically moves per bar.

Tips

Set stop-losses as a multiple of ATR (e.g. 1.5x ATR) rather than a fixed percentage to adapt to current volatility

A rising ATR during a move confirms conviction; a falling ATR during a breakout suggests the move may lack follow-through

Parameters

Period

2 - 100