ATR (Average True Range) — what it is and how to use it in trading
Definition
ATR (Average True Range) is the average candle range (high-low, gap-adjusted) over the last period bars. It shows how much the market moves, not which direction.
How it works in the builder
The atr operand takes a period parameter (default 14) and returns a number in price units — not a percentage, and not a 0-100 scale like most oscillators.
What it looks like on the chart
Drawn as a separate panel as an oscillating line with no upper/lower bound — it rises when volatility increases and falls during quiet periods.
Typical use
Most often used not as an entry condition, but to size the stop-loss/take-profit distance in the exit settings: the more volatile the market, the wider the stop should be. Typical usage: stop-loss = entry − atr(14) × 1.5.
Common pitfalls
ATR is a measure of volatility, not direction — on its own it gives no buy or sell signal. During the indicator's warm-up period, right at the start of history, ATR reads as zero rather than missing — the backtest accounts for this, but it's worth not confusing a zero ATR with "no volatility".
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.