ATR (Average True Range)

ATR is the average size of price moves over the last N periods (default is 14). It measures volatility — not direction. When ATR is high, the market is moving aggressively. When ATR is low, the market is quiet. ATR doesn't tell you UP or DOWN, just how big the typical move is. The most powerful use of ATR is for setting stop losses. Instead of picking a stop level off vibes, use a multiple of ATR — e.g., 1.5x ATR below entry for a long. This adapts your stop to current volatility. In a quiet market, you get a tighter stop. In a volatile market, you get more room. Either way, the stop is mathematically based on what the market is actually doing. ATR also helps with position sizing. If you risk $100 per trade and your stop is 1.5x ATR (which is, say, 30 pips today), you can calculate your lot size precisely.