Discover our technical indicator strategies to optimize your trades
ATR measures market volatility by calculating the average of price variations. The higher the ATR, the more volatile the market.
Used to size positions and place stop losses adapted to volatility.
High ATR = Wide movements expected - Be careful
Low ATR = Calm market - Explosion coming
Rising ATR = Strong movement in progress - Accelerating trend
Strong volatility - Wide movements - Increased risk, use wider stops
Normal volatility - Balanced conditions
Low volatility - Calm market, tighten stops, expect breakout soon
Meaning : Increasing ATR indicates growing volatility and strong movements
Market Context : Strong trend in progress or beginning
Use wider stops, ride the trend
Meaning : Decreasing ATR indicates calming market, potential breakout ahead
Market Context : Market consolidating, calm before storm
Tighten stops, prepare for breakout
Meaning : Sudden ATR spike indicates major event or explosive move
Common Causes : News, earnings, breakouts, liquidations
Stay out or reduce position size
When ATR reaches its lowest in 30-50 periods = Market in MAXIMUM COMPRESSION. The calm before the storm. An explosive move is imminent within 1-3 days. Prepare your orders!
Calculate ATR% = (ATR ÷ Current Price) × 100. Allows comparing volatility between different assets. Bitcoin ATR%=3% vs Altcoin ATR%=8% = Alt is 2.5x more volatile. Essential for multi-asset trading!
ATR follows cycles: Low volatility → Breakout → High volatility → Exhaustion → Back to low. Trade breakouts from low ATR zones for best risk/reward!
Compare ATR across multiple timeframes: If Daily ATR + 4H ATR + 1H ATR are ALL expanding = Volatility confirmed on all levels = Massive move in progress. If divergence between timeframes = Local volatility only.
ATR-based stops adapt to volatility. In high volatility (high ATR), use wider stops. In calm markets (low ATR), tighten them. Dynamic = smart!
High ATR = smaller position size to maintain same risk. Low ATR = can use larger size. Always calculate: Risk = Position Size × ATR × Multiplier
Spiking ATR = extreme conditions. Either stay out or reduce size dramatically. Never use normal position sizing in extreme volatility. Recipe for disaster!
When ATR is low AND Bollinger Bands squeeze = massive breakout coming. Combine both for highest probability explosive moves. Best trading setup!
Breakout from low ATR zone at major S/R level = highest win rate setup. ATR will expand massively after breakout. Place TP at 3-5x initial ATR!
Price in uptrend + ATR rising progressively = HEALTHY and powerful trend. More participants joining the move. Stay in the trade! If ATR falls in trend = Exhaustion coming soon.
Always set your stop loss at 2x ATR minimum. This gives the trade room to breathe while protecting your capital. Anything less = high probability of premature stop-out!
When ATR reaches 6-month lows, prepare for massive move. The longer the calm, the bigger the explosion. These are the best setups!
When ATR is 2x normal, cut position size by 50%. High volatility = higher risk. Protect your capital by sizing down, not avoiding the trade!
Crypto: ATR higher than stocks. Weekend: ATR drops. News events: ATR spikes. Always compare current ATR to historical average for that specific asset and timeframe.
