ATR (Average True Range)
ATR measures volatility by averaging the true range — the largest of today's high-low, |high-close[1]|, or |low-close[1]| — over N bars.
Read22 terms — from EMA to walk-forward analysis. Plain-English definitions with Pine Script examples and links to the strategies that use them.
ATR measures volatility by averaging the true range — the largest of today's high-low, |high-close[1]|, or |low-close[1]| — over N bars.
ReadBacktesting runs a strategy on historical data to estimate how it would have performed before risking real money.
ReadBollinger Bands plot two standard deviations above and below a moving average, defining a dynamic range for price.
ReadA breakout is a price move beyond a defined level (e.g. a recent high) that signals a new trend or continuation.
ReadA crossover happens when one series crosses above another — used as the entry signal in moving-average and oscillator-based strategies.
ReadDrawdown is the percentage decline from a peak in your account equity to the next trough — the most important number in risk management.
ReadThe exponential moving average weights recent price data more heavily than older bars, making it faster to react than a simple moving average.
ReadLot size is the standard unit of trade size — 1 lot is 100,000 base currency units in forex.
ReadMACD shows the relationship between two EMAs of price — used to spot trend changes and momentum shifts.
ReadMean reversion strategies bet that prices stretched far from a moving average will snap back — works in range-bound markets, fails in strong trends.
ReadOverfitting is when a strategy is tuned so tightly to historical data that it fails on live markets. The #1 killer of backtested strategies.
ReadA pip is the smallest standard price increment for a trading instrument — usually the 4th decimal for forex, $0.01 for gold.
ReadPosition sizing converts risk percentage into actual lot sizes — the math that makes risk management real.
ReadProfit factor is gross winning trades divided by gross losing trades — a quick test of whether a strategy has any edge at all.
ReadRisk management is the discipline of sizing positions and placing stops so that no single trade — or string of losses — can ruin your account.
ReadThe RSI oscillates between 0 and 100, measuring the velocity of recent gains vs losses to identify overbought and oversold conditions.
ReadThe Sharpe ratio measures excess return per unit of volatility — the most-cited risk-adjusted performance metric in finance.
ReadThe simple moving average is the unweighted mean of the last N bars — slower to react than an EMA but with smoother output.
ReadLike Sharpe, but only counts downside volatility — a more honest measure for asymmetric strategies.
ReadTrend following is the strategy of buying assets that are going up and selling assets that are going down — counterintuitively, the most-profitable systematic style for retail traders.
ReadWalk-forward analysis tests a strategy by optimising on one window and testing on the next — repeated rolling forward through history.
ReadWin rate is the percentage of trades that close in profit — important but easily misleading without payoff ratio context.
ReadWe use cookies for analytics and ads measurement. See our privacy policy.