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// ATR.MQ5
What is the ATR indicator?
Average True Range (ATR)Volatility
It does not show direction, only how strongly the market is moving — the basis for a sensible stop-loss.
Measures the market's average volatility as a smoothed average of the True Range.
EMA 14Illustrative data — not real market data, not a trading signalEMA 14Illustrative data — not real market data, not a trading signal
Illustrative signals of the rule on simulated data — not a trading recommendation.
Rule: Price closes beyond the high/low of the previous 10 candles while ATR(14) rises: buy/sell in the breakout direction. Entry = close of the signal candle; SL = entry ∓ 1.5 × ATR(14); TP1/TP2/TP3 = 1R/2R/3R.
CONCEPT ILLUSTRATION · Signal rule: Price closes beyond the high/low of the previous 10 candles while ATR(14) rises: buy/sell in the breakout direction.Price breaks the high while ATR rises → a breakout with volatility · 14PriceChannel highRising ATR
Three reasons Average True Range is still used after decades.
A stop-loss based on the market
The stop distance is based on the real range, instead of a guessed fixed number of pips.
Position size can be calculated
Knowing the range lets you convert it into a volume so each trade risks exactly the intended share of capital.
Session filter
A very low ATR means the market is asleep; many systems stop trading during that phase.
// READING_SIGNALS
How to read Average True Range signals
How Average True Range (ATR) produces its number, and what each shape on the chart means.
Formula and how it works
Each candle's True Range is the largest of three values: (high − low), |high − previous close|, |low − previous close|. ATR is the Wilder-smoothed average of the True Range over N periods. A high ATR means high volatility; ATR does not show direction, only the size of the moves.
How to use it in an EA
Set Stop Loss and Take Profit as multiples of ATR to adapt to volatility; use ATR to filter out periods when the market is too quiet or too noisy.
Fits when
Any context — ATR is a risk management tool, not a tool for finding entries.
Struggles when
Using ATR as a buy/sell signal. It contains no directional information, so on its own it never says buy or sell.
ATR rises quicklyVolatility is expanding — often alongside news or a break of a price zone.
CONCEPT ILLUSTRATION · ATR rises quicklyATR rises → the price range is widening · 14ATRTime
ATR stays low for a long timeThe market is consolidating. The stop-loss should tighten accordingly, not stay the same.
CONCEPT ILLUSTRATION · ATR stays low for a long timeProlonged low ATR → narrow range, the stop-loss needs to tighten · 14ATRNormal level
ATR is several times its usual levelA warning of slippage risk; position size should shrink, not stay the same.
CONCEPT ILLUSTRATION · ATR is several times its usual levelUnusually high ATR → consider a smaller position size · 14ATRNormal level
Common mistakes
Keeping a fixed stop-loss distance while ATR has doubled. The trade then gets stopped out by the market's normal swings.
// PARAMETERS
Recommended MT5 parameters for Average True Range
Default values of the sample file; test them for your market and timeframe.
Parameter
Description
InpPeriod
True Range smoothing period (default 14).
// INSTALL
Put the indicator into MetaTrader 5
Four steps, no software needed besides MT5.
01Download the .mq5 file
Click the download button above; the file saves to your computer under the indicator's name.
02Open the data folder
In MetaTrader 5 choose File → Open Data Folder, then go to MQL5/Indicators.
03Compile
Open the file in MetaEditor and click Compile. No errors means the indicator is ready.
04Drag it onto the chart
Go back to MT5, refresh the Navigator and drag the indicator onto the price chart.
📄 atr.mq5
DinexSpace wrote this file from the indicator's public formula, not from any commercial source. You are free to edit and reuse it.
// THE_DIFFERENCE
How it differs from MetaTrader 5's built-in indicator
The short answer: the formula is not different. What differs is what you can do with it.
Average True Range here gives exactly the same number as MetaTrader 5's built-in version — on purpose. The four points below are what differs, and all four can be read from the very atr.mq5 you download.
Calls a built-in indicator
No — the calculation sits in OnCalculate and can be copied straight into an EA
External libraries
Not a single #import declaration
Code length
53 lines · 1 input parameters
How it draws
A separate window below the price chart · calculated incrementally, does not redraw the past
Frequently asked questions about Average True Range
Does ATR give buy/sell signals?+
No, and that is not a flaw. ATR only measures the size of the swings and contains no directional information at all. Its role is to set the stop-loss distance and position size for another system.
How many ATRs should the stop-loss be?+
1.5 to 2 times ATR is the common range. Smaller and the trade gets stopped out by normal swings; larger and each losing trade costs too much. What matters is keeping the multiple fixed and adjusting position size to it.
Does Average True Range on this page use real or simulated data?+
The chart on this page uses a deterministic simulated candle series; it is not market prices or trading results.
Using Average True Range in an EA, and further reading
An indicator draws signals, but when to enter, where to stop out and how much to risk are still your set of rules. Send those rules and DinexSpace builds them into an EA.
