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Analysis

Average true range (ATR) — definition & meaning

An indicator that measures how much an instrument typically moves.

The ATR measures average volatility by looking at how far price travels each period, including gaps. A high ATR means big moves; a low ATR means quiet conditions.

ATR does not tell direction. Traders use it to size stops and positions — for example, placing a stop a multiple of ATR away so it adapts to current volatility.

The information on Trding.io is for general information only and is not investment advice. Trading involves a real risk of losing money, and most retail traders lose. Never trade money you cannot afford to lose.

Related terms

Volatility
How much and how quickly a price moves over time.
Stop-loss
A preset order that closes a losing trade to cap your loss.
Position sizing
Choosing how large a trade to place based on your risk per trade.
Average directional index (ADX)
An indicator measuring trend strength, regardless of direction.
Volume
The number of units traded over a period — a gauge of activity.
Support
A price level where buying has tended to stop a decline.

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