February 7, 2026 · Wei Tan
Reading ATR Before You Enter
Using average true range as a gate for entry timing and as the backbone of stop distance.
Average true range is not a crystal ball. It is a ruler. Used before entry, it tells you whether today’s stop distance is ordinary or extreme relative to recent history.
Gate the entry
If ATR has expanded sharply versus its own twenty-day median, ask whether your usual pattern still deserves full size. Many analysts keep the same share count while volatility doubles—an automatic risk increase they never intended.
Anchor the stop
Stops expressed as a multiple of ATR adapt when the market breathes differently. Combine ATR with structure: place beyond the level, then confirm the distance is at least a minimum ATR fraction so noise does not shake you out by design.