Trader's Glossary

ATRAverage True Range

Average size of price movement over N periods. Used for sizing stops (e.g. stop = 1.5 × ATR).

Average True Range (ATR) is a volatility indicator that measures the average size of a candle's range (high–low, accounting for gaps) over N periods. ATR isn't directional — it just tells you how much the market is moving.

Use ATR to size stops correctly for current volatility: a 1.5× ATR stop is the common standard. In low volatility (small ATR), tighter stops work; in high volatility, wider stops are mandatory. ATR-based stops adapt automatically as conditions change, which is why funded prop traders use them universally.