All TermsIndicator

ATR (Average True Range)

Average True Range is a volatility indicator. The 'true range' for any bar is the largest of: today's high minus today's low, the absolute value of today's high minus yesterday's close, or the absolute value of today's low minus yesterday's close. ATR is the average of true range over N bars (default 14).

What ATR is for

ATR doesn't predict direction — it sizes risk. A stop placed at entry − 2 × ATR adapts automatically: tight on quiet EUR/USD, wide on volatile Bitcoin. The same parameter works across markets.

Formula

TR = max(high − low, |high − close[1]|, |low − close[1]|)

ATR = ta.rma(TR, 14)

In Pine Script

pinescript

atr = ta.atr(14)
stop_loss = strategy.position_avg_price - atr * 2

See ATR Trend Follow for a complete volatility-adaptive strategy.

Strategies that use ATR (Average True Range)

ATR Trend Follow

Volatility-adjusted trend following — trail stops by ATR multiples.

Related Terms

Bollinger Bands

Bollinger Bands plot two standard deviations above and below a moving average, defining a dynamic range for price.

Risk Management

Risk management is the discipline of sizing positions and placing stops so that no single trade — or string of losses — can ruin your account.

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