Average True Range (ATR) Indicator

What is ATR?

Average True Range (ATR) measures market volatility by averaging the True Range over a specified period. It does not indicate direction, only volatility magnitude.

How the ATR Indicator Works

True Range (per bar) is the maximum of:

  • High − Low
  • |High − Previous Close|
  • |Low − Previous Close|

ATR = Moving average of True Range over N periods (commonly 14).

Interpretation:

  • Rising ATR indicates increasing volatility; falling ATR indicates contraction.
  • Can be used for position sizing, stop placement, and breakout filters.

Available Settings in FutPrint

  • Period: Default 14
  • MA Type: SMA/EMA (if supported)
  • Style: Line color and thickness

Practical Usage and Best Practices

  • Use multiples of ATR for trailing stops (e.g., 2× ATR below swing low in uptrends).
  • Filter entries: require ATR above a threshold to avoid low-volatility chop.
  • Combine with trend indicators (e.g., MA direction) for context.

Limitations:

  • ATR expands during gaps and news; recalibrate thresholds for volatile assets.

Using ATR in the Platform

  1. Add ATR from Volatility indicators.
  2. Set period and style.
  3. Optional: Plot ATR bands or use ATR value in strategy rules.

See Also