Signals

ATR — Average True Range

Quantify recent volatility for sizing and stop placement.

What it is

ATR measures recent trading range expansion, giving you a direct volatility read that is independent of directional bias.

When to use it

Sizing positions or stops based on current market volatility.
Comparing how noisy one symbol is versus another.
Filtering out strategies that rely on quiet conditions during volatile regimes.

The maths

TR = max(high - low, |high - prev_close|, |low - prev_close|), ATR(N) = EMA(N) of TR The default N is 14.

What it tells you

ATR measures volatility, not direction. A rising ATR means price is moving more per bar, and traders often use it to size stop-losses and position sizes in proportion to current market risk.

REST example

python

import os
import requests

response = requests.get(
  'https://api.financedata.com/v1/signals/ATR/AAPL',
  params={'start_date': '2025-01-01', 'end_date': '2025-04-30', 'period': 14},
  headers={'X-API-Key': os.environ['FDA_KEY']},
  timeout=30,
)
response.raise_for_status()
print(response.json())

MCP example

Tool call body

{
"name": "get_atr",
"arguments": {
  "symbol": "AAPL",
  "start_date": "2025-01-01",
  "end_date": "2025-04-30",
  "period": 14
}
}

Agent prompt that triggers it

Show me AAPL ATR over the last four months and explain whether volatility is expanding into the most recent reading.