Volatility indicator
ATR (Average True Range)
A volatility measure of the average range price travels per bar.
What is ATR (Average True Range)?
Average True Range (ATR), from J. Welles Wilder, measures volatility as the average size of each bar's true range. It doesn't show direction, it shows how much the instrument typically moves, which makes it ideal for sizing stops and targets.
How it works
True range is the largest of: current high-low, high-vs-previous-close, and low-vs-previous-close (so it accounts for gaps). ATR is a smoothed average of true range over a lookback (classically 14). A rising ATR means expanding volatility; a low ATR means a quiet, compressed market.
How traders use it
- ▸Stop placement: set stops a multiple of ATR away to respect volatility.
- ▸Position sizing: risk a fixed amount, scaled by ATR, per trade.
- ▸Volatility filter: only trade when ATR confirms enough movement.
- ▸Targets & trailing stops: ATR-based distances adapt to the market.
Build ATR (Average True Range) without code in Algovex
ATR is a node in Algovex used widely inside other logic, feed it into stop-loss, take-profit or position-sizing nodes so your strategy adapts to volatility automatically. Backtest with slippage and commissions, then export.
Key parameters
| Parameter | What it does |
|---|---|
| length | Lookback period for the average (classic 14). |
| multiplier | Used when ATR drives stop/target distance. |
Frequently asked questions
How do traders use ATR for stop-losses?
A common method is placing the stop a multiple of ATR (e.g. 1.5–3×) from entry, so the stop is wide enough in volatile conditions and tighter in quiet ones. Algovex lets you wire ATR directly into stop-loss nodes.