ATR (Average True Range)

Measures volatility - average price range over a period.

ATR averages the true range between high and low (including prior session gap). Standard period: 14. High ATR = high volatility, low = consolidation. Used for stop placement: 1.5x or 2x ATR below entry gives room for normal noise but cuts true reversals.

In plain words

Measures how much price jumps on an average day. Traders set stops 1.5-2x ATR below entry. High ATR = take a smaller position.

Example

BTC ATR(14) = 2000 USD. Long entry 70k -> stop 67k (1.5 ATR), target 74k (2 ATR). RR = 1.33:1.

Also known as: average true range

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