Summary
Average True Range, or ATR, measures volatility. It tells you how much an asset usually moves over a selected number of candles.
Important:
ATR is not an exact price level. ATR is a price distance / price fraction.
When you use ATR for a stop loss or take profit inside a Buy or Sell block, choose:
Custom Price Fraction
Do not choose Custom Price Level for ATR.
What ATR tells you
ATR shows the average movement range of recent candles.
Example:
If ATR is 25 pips, it means the asset has recently moved around 25 pips per candle on average.
It does not mean price is at 25.
It means the distance is 25 pips.
ATR does not show direction. It only measures volatility.
Price Level vs Price Fraction
Price Level
A Price Level is one exact price on the chart.
Examples:
EURUSD = 1.08500 Previous candle high = 1.08720 Moving Average = 1.08350
Use Custom Price Level when the value is an actual market price.
Good examples:
Stop loss at previous candle low Pending order at candle high Entry at Moving Average value
Price Fraction
A Price Fraction is a distance, size, or relative value.
Examples:
ATR = 25 pips Candle range = 40 pips 2 × ATR = 50 pips
Use Custom Price Fraction when the value describes a distance from the entry price.
ATR belongs here.
The rule to remember
Use this decision rule:
Exact price on the chart? → Custom Price Level Distance from entry? → Custom Price Fraction
For ATR:
ATR stop loss = Custom Price Fraction
Not:
ATR stop loss = Custom Price Level
Stop loss modes in Buy and Sell blocks
In Buy and Sell blocks, you can choose different stop loss modes.
Mode | Use when |
No Stop Loss | You do not want a stop loss |
Fixed Pips | You want a fixed pip distance |
Percentage of Price | You want SL based on asset price percentage |
Percentage of Take Profit | You want SL based on TP distance |
Custom Price Level | You have an exact price, like candle low |
Custom Price Fraction | You have a distance, like ATR |
For ATR, choose:
Custom Price Fraction
How to use ATR as a stop loss
Example settings:
Stop Loss Mode: Custom Price Fraction Value: Average True Range ATR Period: 14 Time Frame: Current Candle ID: 1
This means:
Use ATR from the last closed candle
Use the current chart timeframe
Use the ATR value as stop loss distance
If ATR is 25 pips, the stop loss is placed about 25 pips away from the entry.
How to use 2 × ATR
Many users want a wider volatility-based stop.
Example:
Stop Loss = 2 × ATR
In the Buy or Sell block:
Set Stop Loss Mode to Custom Price Fraction
Select Indicator
Select Average True Range
Open Adjust
Multiply by
2
If ATR is 25 pips, then:
2 × ATR = 50 pips
The stop loss is placed around 50 pips away from the entry.
ATR settings
ATR Period
The number of candles used for the ATR calculation.
Common setting:
14
Shorter periods react faster. Longer periods are smoother.
Time Frame
The timeframe used for the ATR calculation.
Examples:
Current M15 H1 H4 D1
Candle ID
Use:
Candle ID 1
for the last fully closed candle.
Avoid Candle ID 0 unless you intentionally want the current forming candle.
Adjust
Use Adjust to multiply, divide, add, or subtract from the ATR value.
Common example:
ATR × 2
Common mistakes
Mistake: Using Custom Price Level for ATR
Wrong:
Stop Loss Mode: Custom Price Level Value: ATR
Correct:
Stop Loss Mode: Custom Price Fraction Value: ATR
ATR is a distance, not a chart price.
Mistake: Thinking ATR shows direction
ATR does not say buy or sell.
It only says how much price has been moving.
Use ATR together with entry logic, trend logic, or momentum logic.
Mistake: Not checking in Visual Mode
After exporting, test in MT5 Visual Mode.
Check whether the stop loss distance looks correct on the chart.
If the stop is too close or too far away, check:
ATR Period Time Frame Candle ID Custom Price Fraction mode Adjust multiplier
Quick guide
Value | Correct mode |
Previous candle high | Custom Price Level |
Previous candle low | Custom Price Level |
Moving Average value | Custom Price Level |
ATR | Custom Price Fraction |
2 × ATR | Custom Price Fraction |
Candle range | Custom Price Fraction |
Fixed 30 pip stop | Fixed Pips |
Conclusion
ATR measures volatility as a distance.
It is not an exact price level.
When using ATR for stop loss or take profit logic inside a Buy or Sell block, choose:
Custom Price Fraction
Use Custom Price Level only for real chart prices, such as candle highs, candle lows, Bid, Ask, or Moving Average values.
Export and test in MT5 Visual Mode to confirm the stop loss behaves as expected.