ATR (Average True Range)
ATR is Wilder's average true range — the average size of a stock's daily trading range over 14 sessions, gaps included, expressed in rupees; it measures how much a stock moves, not which way.
True range extends the day's high-minus-low to include gaps: it is the largest of the session's range, the distance from yesterday's close to today's high, and the distance to today's low. ATR smooths that over 14 bars with Wilder's own moving average, producing a rupee figure for how far the stock typically travels in a session. A gap-open that never fills counts in full, which is exactly what a plain high-low range would miss.
ATR's main use is not as a signal but as a ruler. Comparing today's true range against the stock's own ATR normalises across price levels — a ₹50 stock and a ₹5,000 one can be judged by the same standard — which is how narrow-range and range-expansion scans are built. Position sizers divide their risk budget by ATR to size trades; stop placers set exits a multiple of ATR away so quiet stocks get tight stops and wild ones get room. Supertrend and Keltner channels are both ATR with a trend line attached.
The caveats are about interpretation. ATR is denominated in rupees, so raw values cannot be compared across stocks — a big ATR may just mean a high price, and cross-stock comparisons need it taken as a fraction of price. It also carries Wilder's long memory: after a volatile spell ATR deflates over weeks, quoting risk that has already left, and a single circuit-limit day inflates the average for the next fourteen bars.
Against Bollinger width, the other volatility gauge here, the difference is the input: ATR averages the traded range including gaps, while band width measures the dispersion of closes. A stock gapping daily but closing tightly shows a high ATR and narrow bands — both readings true, about different things.
In Sift
Written as atr(14). A working scan — stocks whose average range has expanded five straight sessions inside an uptrend:
where atr(14) rising for 5 bars and close > sma(50)1
of the 500 most-traded NSE stocks match today, as of 20 Aug 2026
Scans that use it
Prebuilt scans in the library whose query reads this value — each with a hit-rate replay over the last 250 sessions.
Common questions
What is a good ATR value for a stock?
There is no good absolute value — ATR is in rupees, so it scales with price, and ₹80 of ATR on a ₹4,000 stock is calmer than ₹15 on a ₹300 one. The useful comparisons are against the stock's own history (is the range expanding?) or as a percentage of price when ranking across stocks.
How is ATR used for stop losses?
By placing the stop a multiple of ATR away from entry — commonly 2 to 3 — so the exit sits outside the stock's normal daily wobble. A volatile stock gets a wide stop, a quiet one a tight stop, from the same rule. Supertrend automates exactly this, trailing a stop three ATRs from price.
Does a rising ATR mean the stock is going up?
No — ATR is direction-blind. It rises whenever daily ranges widen, which happens in crashes at least as dramatically as in rallies. A rising ATR says the market has become more active and dispute about price has grown; the direction of that dispute has to be read from price itself.