ATR (Average True Range)

ATR measures how far price actually travels per bar. Each bar's true range extends the simple high-low range to cover gaps from the prior close:

TR  = max( high − low,
           |high − previous close|,
           |low  − previous close| )
ATR = Wilder-smoothed average of TR over N bars (N = 14 by default)

If BTC's 1-hour ATR(14) is $420, a normal hour currently spans about $420 of range.

Why it's everywhere in systematic trading

ATR converts strategy parameters from fixed dollars into units of current noise, which keeps rules meaningful across volatility regimes. A stop at entry − 2 × ATR sits outside typical noise whether the market is sleepy or violent; a fixed $500 stop does not. A trailing stop at k × ATR gives trends room in exact proportion to their turbulence. Position sizing that risks 1% of equity over a 2-ATR stop automatically sizes down when volatility doubles. And a filter like "current range > 1.25 × ATR" is a volatility-expansion condition that keeps breakout systems out of dead markets.

On AlphaProve

ctx.indicators.atr hands the 14-period series to a Python strategy, and the same true-range math underpins two other cards in the 39-indicator library: keltner, whose bands are ATR-wide, and supertrend, whose flip level trails at a multiple of ATR. If you are unsure where to start the period or multiple, the AI indicator research catalog lists ATR's defaults and common pitfalls before you commit to a setting.