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Technical indicator #3

ATR (Average True Range)

Average True Range

A line showing how much price moves on average per candlestick. It tells you how "rough" the market is, not which way it's going.

Importance★★★
TypeVolatility
Common settingsPeriod 14 is common
MT5（FUNDED7）Built in

1A 30-second chat

JUDITH
JUDITHSo it can't tell whether price will go up or down?
JADE
JADEIt can't. ATR only measures "how much it moves." But at a prop firm, that's the most useful thing
JUDITH
JUDITHWhy?
JADE
JADEBecause at a prop firm, you fail by breaking loss rules. If you know today is twice as rough as usual, you can halve your lot size to keep your loss size the same

2Here's how it looks

ATR at a glanceATR (avg range per candle)High line = choppy
ATR shows "how much price moves," not which direction

3Just check this

1

Size of the value

The bigger it is, the rougher the moves. Your profit/loss swings more, even with the same lot size

2

When it suddenly rises

A sign the market is rough from data releases or news

3

A guide for stop loss width

Many traders set their stop loss at 1–2 times the ATR

4Reading basics

▲ Sign it may riseATR rising → price moves are rough. A time to use smaller lots and keep your losses steadier
▼ Sign it may fallATR falling → price moves are calm. Sometimes this is the "quiet time" before a big move

Technical indicators are calculated from past price moves, so they react a little late and can be wrong (false signals). The basic rule is not to decide from just one.

5Prop firm watch-outs

ATR ties directly into your lot size. For example, if you want to lose no more than $250 per trade, choose the lot size where your stop loss distance (such as 1.5× ATR) equals $250. On rough days your lot size gets smaller automatically, so even on data release days you are less likely to break the daily loss line in one trade.

Daily loss line (50K account) Prior day end balance $50,000 Break this = fail $47,500 5% Max loss/day $2,500 (incl. unrealized) New day: 7am winter/6am summer
Daily loss line:5% of the previous day's closing balance. Unrealized losses count too (Official FAQ）

6How to show it in MT5

These are real screens from the Android MT5 app.Swipe sideways, or use the button below to go next

MT5 step 1MT5 step 2MT5 step 3MT5 step 4
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📱 Smartphone (iPhone & Android)

1

Tap the wavy-line icon (Indicators / インディケータ) at the top of the chart screen

2

Tap "f+" to the right of Main chart (メインチャート). (Indicators shown in the lower window open in a separate window automatically)

3

Tap "Average True Range" in the list

4

Enter the numbers and tap Save (保存) at the top right

💻 Computer

1

In the top menu, click Insert (挿入) → Indicators (インディケータ) → Oscillators → Average True Range

2

When the settings window (Parameters / パラメータ) opens, enter the numbers below

3

Tap OK to finish. You can also drag it onto the chart from the Navigator (ナビゲーター) on the left

🔧 Numbers to enter (common settings)

✓

Period

14

✓

Where it shows

Shown in a separate window below the chart

✓

Number to watch

The current value shown at the top right

ATR is a "price range." For USD/JPY, read 0.30 as 30 sen. For the steps, see the official help from MT5's developer (iPhone · Android · PC). Menu names may appear in English depending on your language settings.

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← PreviousHorizontal lines (support & resistance)Next →VWAP (Volume Weighted Average Price)

Common settings are general guides. How to show them depends on the chart software.

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