ATR — Average True Range and Volatility Stops
7/6/2026
indicators
risk-management
guide
ATR (Wilder again) measures the average size of recent candles, wicks included — the market's normal step size.
Level by level
Beginner
If a stock's ATR is 5 rupees, a 2-rupee stop-loss is inside the noise — you'll be stopped out by randomness. Stops belong OUTSIDE the noise.
Intermediate
The classic volatility stop is 1.5-2x ATR beyond your level; position size then derives from that distance (see the ATR-stop and position-size calculators in Tools).
Advanced
ATR normalises systems across instruments: risk 1 ATR per unit and returns become comparable between a calm bank stock and a wild small-cap.
Common mistakes
- Fixed 1 percent stops on instruments with 3 percent daily ranges
- Confusing ATR (volatility) with trend direction — it has none
Practise & tools
_Educational content only — not financial advice. Historical behaviour never guarantees future results._
Keep learning — free tools