What an ATR stop is
The Average True Range (ATR) measures how far a market typically moves per bar, gaps included. An ATR stop places your stop-loss a multiple of that typical move away from the entry, so the stop adapts to current volatility: wider when the market is wild, tighter when it is calm. It keeps you out of normal noise without choosing arbitrary pip distances.
How to use the calculator
- Choose long or short.
- Enter your entry price.
- Enter the current ATR value from your chart, on the timeframe you trade (14 periods is the usual default).
- Choose the multiplier; 1.5 to 3 is common, and larger values give the trade more room.
- Set the reward as an R multiple to place a target at a fixed reward-to-risk ratio.
The panel shows the stop price, the stop distance in price and in percent, the target, and the break-even win rate implied by the R multiple.
The formula
stop distance = ATR × multiplier
long: stop = entry − distance target = entry + distance × R
short: stop = entry + distance target = entry − distance × R
The true range of a bar is the largest of: high − low, |high − previous close| and |low − previous close|. The ATR averages it over N bars.
Worked example
EUR/USD long at 1.1600 with a daily ATR of 0.0060 (60 pips), a 1.5 multiplier and a 2R target:
- Distance = 0.0060 × 1.5 = 0.0090 (90 pips)
- Stop = 1.1600 − 0.0090 = 1.1510
- Target = 1.1600 + 0.0090 × 2 = 1.1780
- Break-even win rate at 2R = 1 ÷ 3 ≈ 33.3%
Short gold at 4,000 with an ATR of 40 and a multiplier of 2: the stop goes to 4,080 and a 2R target to 3,840.
Once you have the stop distance, turn it into a size with the position size calculator. A wider ATR stop has to mean a smaller position for the same dollar risk.
Common mistakes
- Mixing timeframes. A daily ATR on a 5-minute entry gives a stop far too wide; a 5-minute ATR on a swing trade gives one far too tight. Use the ATR of the timeframe that defines your setup.
- Keeping the size constant. When volatility doubles, an ATR stop doubles in distance. If the size stays the same, so does the dollar risk — twice over.
- Treating one multiplier as optimal forever. Test a few values on your market's history; volatility regimes change.
- Forgetting the spread. On short timeframes, add the spread to the stop distance.