Forex Daily Volatility Calculator

Forex Volatility and Average True Range

Volatility measures how much a currency pair moves in a given period. For forex traders, daily volatility is expressed in pips, the standard unit of price movement. Understanding typical daily movement helps you set stop-loss levels, choose position sizes, and judge whether a profit target is realistic within a normal trading session.

Average Daily Range, and why it is not quite ATR

This page averages the daily high-minus-low ranges you enter:

Average Daily Range = sum of daily ranges / number of days

That is the Average Daily Range (ADR). Plenty of people call it ATR, and on forex the two are usually within a pip or two of each other, but they are not the same calculation. True Range takes the largest of three numbers: today’s high minus today’s low, today’s high minus yesterday’s close, and yesterday’s close minus today’s low. The last two only matter when price gapped overnight, because a gap is real movement that the high-low range misses entirely.

Forex trades continuously from Sunday evening to Friday evening, so weekday gaps are tiny and ADR tracks ATR closely. The exception is the Monday open, which can gap on weekend news. If your platform reports a real 14-period ATR, prefer that number. If you are reading ranges off a chart by hand, ADR is what you can actually measure, and it is close enough to size a stop.

A higher figure means larger typical daily moves. A lower figure means quieter conditions.

Standard deviation and the sigma bands

Standard deviation measures how consistently the pair moves near its average. A low standard deviation means each day is similar in size, which is predictable. A high standard deviation means erratic days, some much larger or smaller than the average.

Rough interpretation of the bands:

• 1 standard deviation (1σ): about two thirds of days fall within the average ± σ
• 2 standard deviations (2σ): about 95% of days fall within the average ± 2σ

Treat those percentages loosely here. They come from the normal distribution, and daily ranges are not normally distributed: a range cannot be negative, so the shape is squashed against zero on the left and has a long tail to the right. On top of that, five days is a tiny sample. Five is enough to notice that a pair is quiet or wild; it is not enough to put a real confidence interval on anything. The calculation below uses the sample standard deviation, dividing by n−1 rather than n, which is the correction that stops a small sample from understating the spread.

If a range lands far outside the average plus 1σ, something specific happened, and it is usually a scheduled release: a central bank decision, a payroll number, or an inflation print.

Typical daily ATR for major pairs (approximate):

Projecting volatility across timeframes

Daily, weekly and monthly volatility scale by the square root of time, because variance adds up when moves are independent from one day to the next and standard deviation is the square root of variance:

• Weekly range ≈ Daily range × √5 (five trading days per week)
• Monthly range ≈ Daily range × √22 (roughly 22 trading days per month)

So a pair averaging 75 pips a day is expected to cover about 168 pips in a week and 352 in a month. That is a projection of the typical week, not a ceiling, and it assumes days do not trend together. They often do, which is why a strongly trending pair covers far more ground in a month than this rule suggests.

Practical trading applications

Set stop-loss levels at least 1× ATR from entry to avoid being stopped by normal daily noise. Profit targets of 1.5× to 2× ATR work well in trending conditions. In low-ATR (quiet) markets, tighten position sizing — sudden volatility spikes can expand stops quickly. When ATR is expanding over several consecutive sessions, a trend may be developing. When ATR is contracting for multiple sessions, consolidation is likely preceding a breakout.