ATR (average true range)
The average candle range over a given period; a practical measure of volatility. Gives relative units such as "1.5 ATR" for stop distance and targets.
ATR doesn't tell direction, it tells the size of moves. When volatility rises, an ATR-based stop widens automatically and position size shrinks, so risk stays constant.
The daily ATR shows the day's "normal" range; once price has covered the daily ATR, there is statistically less room left for continuation.
Related terms
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