---
title: "Definition of ATR"
url: https://signalscreener.fr/definition/atr/
markdown_url: https://signalscreener.fr/definition/atr.md
description: "Measures market volatility by decomposing the entire range of an asset price for that period."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "ATR"
  - "Average True Range"
translations:
  de: https://signalscreener.fr/de/definition/atr.md
  es: https://signalscreener.fr/es/definition/atr.md
  fr: https://signalscreener.fr/fr/definition/atr.md
  it: https://signalscreener.fr/it/definition/atr.md
  pt: https://signalscreener.fr/pt/definition/atr.md
---

# Average True Range

## What is ATR?

Measures market volatility by decomposing the entire range of an asset price for that period.

## Think of it like this

Like measuring the average height of waves in the ocean - it tells you how rough the waters are, not which direction the tide flows.

## Formula

```
ATR = Average of True Range values over N periods
```

- **True Range**: Greatest of: High-Low, |High-Prev Close|, |Low-Prev Close|
- **ATR**: Smoothed average of True Ranges (typically 14 periods)

## Why it matters

- Measures volatility without direction
- Helps set stop-loss levels
- Used for position sizing
- Rising ATR = increased volatility

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| Low ATR | Low Volatility | Calm market, tighter stops possible |
| Rising ATR | Increasing Volatility | Market becoming more active |
| High ATR | High Volatility | Wider stops needed, bigger moves |
| Falling ATR | Decreasing Volatility | Market calming down |

## Real-world example

If ATR is $2 and stock is at $50, a 2×ATR stop would be at $46, accounting for normal volatility.

---

This is educational content, not financial advice.

Source: [Definition of ATR](https://signalscreener.fr/definition/atr/) on Signal Screener. Free to quote and cite with attribution and a link to that URL, which is the canonical one.

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