📏

ATR (Average True Range)

Average True Range (ATR) is a volatility indicator that measures the average range of price movement over a specified period. It helps traders set appropriate stop-losses, identify volatility changes, and size positions based on market conditions.

Analyze ATR (Average True Range) with AI

Charted identifies atr (average true range) signals and patterns on any chart you upload.

Download Charted

How ATR (Average True Range) Works

ATR calculates the 'true range' for each period (the greatest of: current high minus current low, absolute value of current high minus previous close, or absolute value of current low minus previous close). It then averages these values over the specified period (typically 14).

Key Features

Measures volatility, not direction

Default period is 14

Higher ATR means higher volatility

Lower ATR means lower volatility

Used for position sizing and stop-losses

Trading Signals

→Rising ATR indicates increasing volatility
→Falling ATR indicates decreasing volatility
→Low ATR often precedes breakouts
→High ATR may indicate exhaustion moves
→Use ATR multiples for stop-loss placement

Best Used For

✓Setting volatility-adjusted stop-losses

✓Position sizing based on volatility

✓Identifying potential breakout setups

✓Comparing volatility across different assets

Limitations to Consider

⚠Doesn't indicate price direction
⚠Past volatility doesn't guarantee future volatility
⚠Different markets have different ATR characteristics
⚠Should be used with directional indicators

ATR (Average True Range) FAQs

Common questions about atr (average true range)

A common approach is to set stops at 1.5-2x ATR below entry for longs (or above for shorts). This gives your trade room to breathe based on the asset's normal volatility while protecting against significant adverse moves.

Rising ATR means volatility is increasing - price is moving more per period. This often occurs during breakouts, trending moves, or market stress. Wider stops may be needed.

Use ATR as a percentage of price (ATR ÷ Price × 100) to compare volatility across assets with different prices. A $10 ATR means different things for a $50 stock vs a $500 stock.

Related Indicators

🎯

Bollinger Bands

Volatility bands that expand and contract with price movement

🎚️

Support & Resistance

Key price levels where buying or selling pressure concentrates

📶

Volume Analysis

Analyzing trading volume to confirm price movements

All Technical Indicators

📈 Moving Averages 📊 RSI (Relative Strength Index)📉 MACD 🎯 Bollinger Bands 📶 Volume Analysis 🌀 Fibonacci Retracement ⚡ Stochastic Oscillator 📏 ATR (Average True Range)🎚️ Support & Resistance 📐 Trendlines ☁️ Ichimoku Cloud 🔄 Parabolic SAR

Explore Chart Patterns

🎯 Head and Shoulders 📉 Double Top 📈 Double Bottom 📐 Ascending Triangle 📉 Descending Triangle 🔺 Symmetrical Triangle View All →

Disclaimer: Charted provides technical analysis for educational purposes only. This is not financial advice. All trading involves risk. Always consult a licensed financial professional before making investment decisions.

Master ATR (Average True Range) with AI

Download Charted and get professional technical analysis instantly.

Download for iOS