The average true range measures, in pips, how much a market has typically moved per period recently, taking gaps into account. It is commonly used to set stop distance and position size in a way that adapts to current conditions rather than a fixed number. A rising ATR means the same stop-loss in pips now represents a larger money risk, so sizing should follow it.
Forex glossary
ATR (Average True Range)
Related term
Volatility
Volatility describes how large and how fast price moves tend to be, without saying anything about direction. Highly volatile markets produce bigger pip ranges i…
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