Average True Range (ATR)
Avg True Range
The average bar range — a pure volatility gauge, mostly used to size stop-losses and positions.
How to read it
ATR (Average True Range) measures volatility — the average size of recent bars — not direction. A rising ATR means bigger, faster bars; a falling ATR means a calm, quiet market. It has no fixed scale, so read it relative to its own recent range.
Trading signals
ATR isn't a buy/sell signal on its own — it sizes risk. Many strategies set the stop-loss and martingale spacing as a multiple of ATR, so they widen in volatile markets and tighten in calm ones. A sudden ATR spike flags a change of regime.
Parameters
ATR Period sets how many bars are averaged — a shorter period reacts faster to volatility bursts, a longer one gives a steadier baseline.
- ATR Period
- Bars over which the true range is averaged.