volatility
intermediate
ATR (Average True Range)
A measure of a stock's typical daily price range, used for position sizing and stop placement.
ATR (Average True Range), developed by J. Welles Wilder, measures the typical daily price range of a stock — i.e. its volatility.
Two practical uses:
- Stop placement: an ATR-based stop is set at 1.5–3× ATR below entry. This adapts to each stock's natural volatility — wide-ranging stocks get wider stops, tight stocks get tighter stops.
- Position sizing: ATR-normalised position sizing lets you put roughly equal risk per trade across stocks with very different price behaviours.
Swing Edge displays the ATR % (ATR divided by price) on stock detail pages. Stocks with ATR % > 5–6% are unusually volatile — be conservative with size.