# What Is ATR (Average True Range)? Volatility and Stop-Loss

> ATR measures volatility, not direction, including price gaps; the default period is 14 [1].

Last updated: 2026-10-22 · https://www.nx24.ai/en/rehber/atr-oynaklik-gostergesi

## What is ATR?

The average true range measures the average price movement of a set number of candles. It gives no direction, only how volatile the market is.

## How is it calculated?

For each candle, the true range is the greatest of high−low, high−previous close and previous close−low. The average of 14 candles is typical.

## Stop-loss distance

A stop placed 1.5–3 ATR away from entry is less likely to be hit by ordinary noise. The distance grows in volatile assets and shrinks in calm ones.

## Position size

To risk the same amount of money, open a smaller position in a volatile asset and a larger one in a calm asset: position = accepted risk / (ATR × multiple).

## Source note

Wilder introduced ATR in 1978 in 'New Concepts in Technical Trading Systems'; the default period is 14 and it measures volatility, not direction, including price gaps [1].

## Things to watch

ATR measures past volatility; news and gaps can exceed it. This page is educational, not investment advice.

## Frequently asked questions

**What does ATR measure?**

It measures volatility, not direction, including price gaps [1].

**What is ATR's default period?**

In ATR, introduced by Wilder in 1978 in 'New Concepts in Technical Trading Systems', the default period is 14 [1].

## Sources

1. [Average True Range (ATR)](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/average-true-range-atr). StockCharts ChartSchool. Accessed: 2026-10-22.

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