What is ATR (Average True Range)?
How ATR measures market volatility and why it helps set smarter stop-loss distances.
The simple version
ATR (Average True Range) measures how much a stock moves, on average, in a single trading day. It does not tell you direction — only magnitude of typical movement.
A stock with an ATR of $3 moves about $3 per day on average. A stop loss set $2 away from entry on that stock would be shaken out by normal daily noise.
How it is calculated
ATR uses the "true range" of each day — the greatest of: today's high minus today's low, today's high minus yesterday's close, or yesterday's close minus today's low. This captures gap openings that a simple high-low range misses.
The ATR is then a 14-day moving average of these true ranges.
Using ATR for stop placement
A common approach: set your stop at 1.5× to 2× ATR below entry for a long position. This gives the trade enough room to breathe through normal daily swings without exiting on noise.
TradeMind AI uses ATR as part of the stop-loss calibration — stocks with high ATR get wider stops (but the same risk % of account value, achieved by reducing position size).
ATR in the dashboard
ATR is available as a chart overlay. A rising ATR means volatility is increasing — useful context when a breakout occurs. A rising ATR on a breakout confirms the move has energy.
See it in action
Every TradeMind AI signal shows confidence score, entry, stop, target, and R-multiple — all explained with tooltip hints when you hover the term.