ATR (Average True Range) measures market volatility by calculating the average range between highs and lows over a period. LenQuant uses ATR to adjust leverage recommendations, position sizing, and stop loss calculations.
What ATR Tells You
ATR is expressed in price units and indicates:
- Higher ATR: More volatility, wider price swings expected
- Lower ATR: Less volatility, tighter price movement
- Rising ATR: Volatility increasing, often near big moves
- Falling ATR: Volatility decreasing, often during consolidation
ATR% in LenQuant
We display ATR as a percentage of price for easier comparison across assets:
- ATR% < 2%: Low volatility, can use higher leverage
- ATR% 2-4%: Normal volatility, use moderate leverage
- ATR% 4-6%: High volatility, reduce leverage and size
- ATR% > 6%: Extreme volatility, trade with extreme caution
How ATR Affects Your Trading
LenQuant uses ATR in several ways:
- Leverage Guidance: Higher ATR = lower recommended leverage
- Stop Loss Placement: Stops should be 1-2 ATR from entry
- Position Sizing: Adjust size inversely to ATR
- Risk Flags: Extreme ATR triggers high volatility warning
💡 Pro Tips
- •ATR doesn't indicate direction—only the magnitude of moves
- •Compare current ATR to recent average to spot volatility changes
- •Widen your stops during high ATR periods to avoid stop hunts
- •ATR typically expands during news events and market opens
