How to calculate Average True Range
True range = max(High − Low, |High − Previous close|, |Low − Previous close|)
ATR (Wilder) = (Previous ATR × (n − 1) + Current TR) ÷ n
ATR stop: Long = Entry − k × ATR Short = Entry + k × ATR
Paste prices oldest-first, one value or row per bar — straight from a spreadsheet or CSV export. Use “Sample data” to try it instantly.
Worked example
- ATR(14) = $2.00 and you buy at $100.
- A 2× ATR stop sits at 100 − 2 × 2 = $96 (short: $104).
- Risking $200 with a $4 stop distance → 50 shares (see the position size calculator).
How to interpret Average True Range
ATR is the typical size of a bar's move, including gaps. Using a multiple of ATR for stops keeps them outside ordinary noise, and feeding that stop distance into the position size calculator automatically shrinks positions in volatile markets and grows them in quiet ones.
Limitations and common mistakes
- ATR is in price units; divide by price to compare volatility across instruments.
- Common stop multiples are 1.5–3× ATR; tighter stops get hit by noise more often.