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Indicators

Average True Range (ATR)

The average size of recent candles, including gaps. It measures volatility in price units (pips or points).

1.127291.129171.131051.132931.13481Target · 2RStop · 1REntryStop · 1.5 × ATRDecision pointWhat happened next →
Real example: EUR/USD, 15-minute chart, 2022-01-05. Pattern detected automatically using only the candles before the decision point; on the right, what happened next.

Why it works

A stop smaller than the normal noise of the market will get hit by random movement. ATR tells you how much room price needs.

How to use it

Place stops at least 1–1.5 × ATR beyond your invalidation, and size the position so that distance still costs only your fixed % of the account.

The typical mistake

Using the same 10-pip stop on every market and every day, whether volatility is high or low.

FAQ

What is ATR in trading?

The average size of recent candles, including gaps. It measures volatility in price units (pips or points).

How do you trade ATR?

Place stops at least 1–1.5 × ATR beyond your invalidation, and size the position so that distance still costs only your fixed % of the account.