Average True Range (ATR) Calculator
Calculate Average True Range for any security.
Enter daily high, low, and close prices for 3 periods to measure volatility and calibrate stop-loss levels.
Average True Range was developed by J. Welles Wilder Jr. and published in his 1978 book “New Concepts in Technical Trading Systems.” It remains one of the most used volatility indicators in technical analysis — not because it predicts direction, but because it tells you how much a security typically moves.
Each period’s True Range is the largest of three values:
TR = max(High - Low, |High - Prev Close|, |Low - Prev Close|)
The last two handle gaps. If a stock closes at $50 and opens the next day at $55 on news, the high-to-low range alone understates the real move. True Range captures the full distance from the previous close to wherever price went.
ATR = Average of True Range over N periods
Wilder used 14 periods as his default. This calculator uses 3 periods for quick spot-checks, which works well for day-traders and short-term swing traders who want current volatility, not a long smoothed average.
How traders actually use ATR: it sets stop-losses that adapt to current conditions. A stock moving $3 per day on average needs a much wider stop than one moving $0.40. The most common rule is 1.5x to 2x ATR below entry for a long position — any tighter and normal daily noise will stop you out before the trade has a chance to work.
ATR is also the foundation of position sizing. If your maximum risk per trade is $1,000 and the ATR is $5, holding more than 200 shares puts you over your risk budget based on the asset’s own volatility. This is a more principled approach than picking a fixed dollar stop.
Wilder’s original smoothing formula uses a running average rather than a simple average: ATR(today) = (ATR(yesterday) x 13 + TR(today)) / 14. For most purposes the simple average gives the same practical answer.