Average True Range (ATR)
Technical AnalysisA volatility indicator measuring an instrument's typical price range — used to size stop-losses appropriately for current conditions.
Average True Range measures an instrument's typical volatility over a set number of periods by averaging the true range (the greatest of: current high minus low, high minus previous close, or low minus previous close) of each period. Unlike RSI or MACD, ATR says nothing about direction — only about how much an instrument tends to move.
ATR is widely used to set stop-loss and take-profit distances that scale with current volatility, rather than using a fixed pip distance that might be far too tight (or too wide) depending on market conditions.