How does the ATR help?

I've read that the average true range indicator is more a "reality check" indicator that we can use to complement an strategy.

What strategies are you using that use the ATR indicator?

If you are a daytrader, find days that have much smaller range than the ATR average suggests (I guess larger value is more representative in statistical sense). Then check how your system performs on those days and if you can have net profit. I think it is a good reality check, lol.

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hey ric..... that's probably a good definition for atr......

feline made a good point also..... adding to feline's suggestion above, knowing the atr for the individual sessions per day of the week is a plus......


atr can be valuable, at least for me.... carrying it further, the atr on all timeframes along with the atr left.....

knowing the atr for every hour of the day can help..... it can increase or decrease by a factor of 3 or 4 ......

the eurgbp's 60 minute atr is only 5 right now 10pm est ..... so a 20 pip target would be a long shot..... but at 2am est, something assured to be hit......


it's hard for me take a macd cross short on tuesday that has already fell 150% of it's weekly atr..... but if there is still 242 pips left, i'll roll the dice.......h
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nothing more than lots calculation in my opinion

we scale our stops and targets based on ATR, or multiples of ATR.
in this way your EAs dynamically adjust to the market but also normalises across different pairs
as an example, rather than have a 20 pip stop, use a 1x ATR stop