What ATR shows
The average size of a candle, including gaps. It measures volatility, not direction.
Indicator guide · Volume and volatility
Average True Range (ATR): what it shows, settings and how to read it.
The average size of a candle, including gaps. It measures volatility, not direction.
How it is calculated
The true range of a candle is the largest of: high minus low, high minus previous close, previous close minus low. ATR is the smoothed average of the last N true ranges. It shows how much price moves, not where it is going.
Usual settings
Length 14.
How traders read it
Used to set stops and position size: a stop 1.5 to 2 ATR away sits outside normal noise.
Where it fails
It says nothing about where price will go.
What to combine it with
Any entry signal: ATR is used for stop distance (often 1.5 to 3 x ATR) and position size, not for direction.
Try ATR on a live chart
Sign in, open Genni Charts, press the "ƒx Indicators" button above the chart and choose ATR. Click its name on the chart to change the settings. It is free for every member.
More in "Volume and volatility": Volume · OBV · MFI · All 25 indicators
Questions
Frequently asked questions
What is the ATR indicator?
The average size of a candle, including gaps. It measures volatility, not direction.
What are the best settings for ATR?
The usual settings are: Length 14. No setting is best in every market, so test a change on past data before relying on it.
Is ATR reliable on its own?
No single indicator is. It says nothing about where price will go. Most traders use it together with: Any entry signal: ATR is used for stop distance (often 1.5 to 3 x ATR) and position size, not for direction.
How do I add ATR to a chart for free?
Sign in, open Genni Charts, press the "ƒx Indicators" button above the chart and choose ATR. Click its name on the chart to change the settings. It is free for every member.
This page is education, not investment advice. Trading involves substantial risk of loss. Read next: Trading indicators · Trading strategies · Candlestick patterns