# Average True Range (ATR)

> ATR (Average True Range) is a volatility indicator that shows the average price swing over a period. It helps assess risk and determine position size.

**ATR (Average True Range)** is a technical analysis indicator that measures the **volatility** of an asset.
Its purpose is to determine how much a price changes over a given period and to show the average value of the largest price swings.

The indicator was developed by Welles Wilder in 1978 and was initially used for commodity markets, but today it is also used for cryptocurrencies, stocks, and forex.

## How ATR Works

ATR doesn't indicate the direction of a trend (up or down), but only **measures the strength of the movement**.
A rising ATR indicates increasing volatility, while a falling ATR indicates a weakening movement.

The calculation takes into account:

- The difference between the high and low of the current candle
- The difference between the current candle high and the previous candle close
- The difference between the current candle low and the previous candle close

Then the average of these values ​​is taken for a given period (by default, 14 candles).

## Why ATR is important in crypto trading

Cryptocurrency markets often experience higher volatility than traditional assets.
ATR helps:

- Identify periods of increased or decreased market activity
- Filter trades during calm or dangerously volatile periods
- Adjust Stop Loss and Take Profit sizes
- Avoid opening a deal before strong moves against your position

## ATR in Veles Bots (Standard Indicator)

On the Veles platform, ATR can be used as an entry and closing filter.

To run a bot using volatility:

1. Select the **ATR** filter and set the timeframe.
2. Click the **"Pencil"** icon and set the desired value.

## ATR in Veles Bots (Flexible Indicator)

Available settings:

- Period - the number of candles for calculation. Range: 2–100, default 14.
- Interval - the candle timeframe.
- Method - the calculation type. By bar close (only on the selected interval) or by minute (once per minute for any interval).
- Shift - shifts the requested indicator value back by the specified number of candles.

## ATR% — relative volatility

**ATR%** is the ATR expressed as a percentage of the price.
100% = the maximum possible volatility of the asset.

To use ATR%:

1. Select **ATR%** in the filters
2. Specify the timeframe and percentage
3. Set the conditions (e.g., "greater than 0.6")

## Interpreting values

On lower timeframes (1–15 minutes), ATR% rarely exceeds 3%;
on higher timeframes, values ​​may be higher.
Also consider the typical volatility of a particular asset.

**Example for BTC:**

| Timeframe           | Low Volatility | Medium | High  | Extreme |
|---------------------|----------------|--------|-------|---------|
| 1–15 minutes        |         < 0.5% | 0.5–2% |  > 2% |  Rarely |
| 30 minutes – 1 hour |           < 1% |   1–3% |  > 3% |  Rarely |
| 4 hours             |           < 2% |   2–5% |  > 5% |   > 10% |
| 1 day               |           < 3% |   3–7% |  > 7% |   > 10% |
| 1 week              |           < 5% |  5–10% | > 10% |   > 15% |
| 1 month             |          < 10% | 10–20% | > 20% |   > 30% |

## Trade filtering example

If you want to trade only in a quiet market:

- ATR%, 1 minute, "less than", 2%
- ATR%, 5 minutes, "less than", 2%
- ATR%, 15 minutes, "less than", 3%
- ATR%, 30 minutes, "less than", 3%
- ATR%, 1 hour, "less than", 3%

## Using ATR% in Veles Bots (Flexible Indicator)

Available settings:

- Period - the number of candles for calculation. Range: 2–100, default 14.
- Interval - the candle timeframe.
- Method - the calculation type. By bar close (only on the selected interval) or by minute (once per minute for any interval).
- Shift - shifts the requested indicator value back by the specified number of candles.

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## Combining ATR with other indicators

ATR is often combined with:

- [Keltner Channels](https://help.veles.finance/en/filters/kc/) — where ATR is used to calculate channel boundaries
- [Bollinger Bands](https://help.veles.finance/en/filters/bb/) — to identify high/low volatility phases
- [Moving Averages](https://help.veles.finance/en/filters/sma/) — to determine trend + volatility

## Limitations

- ATR measures movement magnitude, not direction — it cannot be used as a standalone entry signal.
- During news events or liquidation cascades, ATR can spike dramatically, causing filters to block valid entries.
- Historical ATR thresholds may not reflect current market conditions — recalibrate periodically for each asset.

## Summary

ATR and ATR% are essential volatility tools in Veles bots — helping avoid entries during dangerously volatile or completely flat conditions. With clear threshold settings, they improve strategy robustness across different market regimes and pair naturally with any trend or momentum indicator.