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ATR (Average True Range)
Wilder's 14-period average of true ranges — a pure measure of how volatile an asset has been.
What it is
Average True Range, by J. Welles Wilder, quantifies volatility without direction. It averages the 'true range' (the largest of: high-low, |high - prev close|, |low - prev close|) over typically 14 bars. ATR is the foundation of professional stop-loss placement: instead of a fixed -2% stop, traders use 1.5× or 2× ATR — wider stops in volatile markets, tighter ones in calm markets. ATR also dynamically sizes trailing stops, letting trending positions breathe through normal noise without giving up real reversal signals.
Example
ATR on 1h SOL is currently 1.8% of price. A trader places a trailing stop at 1.5 × ATR = 2.7% below the peak. When SOL pulls back 2.2% from a new high, the trade survives — a fixed 2% stop would have triggered prematurely.
How Indikora uses ATR
Indikora's AutoTrader uses dynamic ATR-based trailing stops with a momentum bonus — strong runners get a wider trail so the bot rides the trend instead of clipping out at +1%.
Related terms
- Volatility — The magnitude of price swings over time — high volatility means bigger and faster moves.
- Stop Loss — A pre-set order that closes a losing position automatically once price reaches a defined level.