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