ATR (Average True Range)
How much a stock typically moves in a day, in dollars, averaged over recent days (usually 14).
In plain English
Each day, measure the distance between the day's high and low, counting any jump from the previous day's close. Average that over the last 14 days. A stock with an ATR of $2 usually moves about $2 a day.
Uncle Gary explains
ATR is Aunt Linda's mood range. On a normal day she swings between 'mildly annoyed' and 'fine'. During a family wedding the range triples. If you are planning a joke, you size it to her ATR.
Why it matters for your money
Traders use ATR to set stops that fit the stock: a calm stock gets a tight stop, a jumpy one gets more room. In our golden cross test, stops were 2, 3 or 4 times the ATR.
Where we tested it
- Does the Golden Cross Work? We Tested 72 Strategies
- Does Buying the Dip Work? We Checked Which Dips
- Does a Stop-Loss Protect Your Money? We Tested Tight and Wide Stops
Related terms
All glossary terms. Educational content, not financial advice.