Volatility indicator

ATR

ATR, the average true range, is a volatility indicator that shows the average size of a period's price range, telling you how much an instrument typically moves rather than which direction.

By the ExecutionIQ team · Updated June 2026

How ATR is calculated

True range is the largest of the current high-to-low, the gap from the prior close to the high, and the gap from the prior close to the low. ATR averages that true range over a lookback, usually 14 periods, into a single volatility reading.

How ATR is used

→Size stops by volatility: a wider ATR means a wider stop is needed to avoid noise.
→Use ATR to set position size so each trade risks a consistent amount.
→Compare current ATR to its recent range to judge whether volatility is high or low.
→Rising ATR signals expanding volatility, falling ATR signals a quieting market.