ATR (Average True Range)

ATR (Average True Range) measures how much a stock typically moves in a day, expressed as a dollar amount. It's calculated from each day's true range — the largest of the day's high-to-low, high-to-prior-close, or prior-close-to-low — averaged over a lookback period, usually 14 days. ATR says nothing about direction, only about the size of typical moves, which makes it useful for sizing a stop-loss: a stop set at some multiple of ATR (often 2x) scales to how that specific stock behaves, instead of using one fixed distance for every trade. Because ATR is based on past behavior, it can jump around news or earnings, so a stop sized on yesterday's calmer ATR may be too tight for tomorrow.