ATR (Average True Range)

ATR (Average True Range) is a technical analysis indicator that measures asset volatility. It determines how much the price changes over a selected period and shows the average value of the largest price range.

Developed by Welles Wilder in 1978, it was originally used for commodity markets but today it's applied to cryptocurrencies, stocks, and forex.

ATR does NOT indicate trend direction (up or down), it only measures the strength of movement:

• Rising ATR = increasing volatility
• Falling ATR = decreasing volatility

The calculation considers:

• Difference between high and low of current candle
• Difference between current high and previous close
• Difference between current low and previous close

Then the average of these values is taken over the specified period (default 14 candles).

• ATR: Absolute value in price units (e.g., $500 for BTC means $500 average range)
• ATR%: Percentage of current price (e.g., 2% means price moves 2% on average). Calculated as (ATR / Close) x 100

ATR% makes it easier to compare volatility across different assets and timeframes.

• Period: Number of candles for calculation (default: 14)

| Timeframe | Low Volatility | Medium | High | Extreme | |-----------|---------------|--------|------|---------| | 1-15 min | < 0.5% | 0.5-2% | > 2% | Rare | | 30m - 1h | < 1% | 1-3% | > 3% | Rare | | 4 hours | < 2% | 2-5% | > 5% | > 10% | | 1 day | < 3% | 3-7% | > 7% | > 10% | | 1 week | < 5% | 5-10% | > 10% | > 15% |

Trade Filtering:

| Condition | Use Case | |-----------|----------| | ATR%(14) < 2% on 1m | Enter only in low volatility | | ATR%(14) < 3% on 15m | Filter out volatile periods | | ATR%(14) > 1% on 1h | Trade only when market is active | | ATR(14) > 500 | BTC volatility above $500 |

Volatility Breakout:

| Condition | Use Case | |-----------|----------| | ATR%(14) > 5% on 4h | High volatility alert | | ATR%(14) crosses above 3% | Volatility increasing |

• ATR + Bollinger Bands: Identify high/low volatility phases
• ATR + Moving Averages: Trend direction + volatility
• ATR + ADX: Volatility (ATR) + trend strength (ADX)
• ATR + RSI: Volatility filter + overbought/oversold

• Use ATR% for comparing different assets
• Use absolute ATR for setting stop-loss in price units
• Lower timeframes (1-15 min): ATR% rarely exceeds 3%
• Standard period: 14