ATR measures how far price usually moves per candle. It says nothing about direction.
A stop tighter than one normal candle is often hit by noise, not by a failed idea.
When ATR rises, the stop widens and the volume shrinks. The dollars at risk stay the same.
What ATR measures
The true range of a candle is the largest of three distances: high to low, high to the previous close, or low to the previous close. The last two catch gaps. ATR is the average true range over the last 14 candles by default.
It is shown in price units. If EURUSD on 1h shows an ATR of 0.0012, a typical hourly candle covers about 12 pips. On XAUUSD at 2,380 an hourly ATR might read 6.00, meaning a typical candle covers about $6 of price. On BTCUSDT at 81,900 it could be several hundred dollars. ATR rises in busy sessions and around news, and falls in quiet ones.
Stop distance from ATR
Start from structure, then add a buffer. Say you buy EURUSD at 1.0835 after a pullback. The swing low is 1.0815, and the 15m ATR is 10 pips. A buffer of half an ATR puts the stop at 1.0810: 25 pips from the entry.
A second method uses ATR alone: a stop at 1.5 to 2 times ATR from the entry. It is simple and adapts to volatility, but it ignores where the chart says the idea is wrong. Many traders combine both: the structure gives the place, ATR checks that the stop is not inside normal noise.
Read ATR on the timeframe you enter on. A 15m ATR tells you about 15m noise; a stop sized from the 1D ATR on a 15m entry is usually far wider than the setup needs.
If the stop needed by the chart is many ATRs wide, the setup is poor on that timeframe. Skip it or move to a higher one.
A wider stop means a smaller size
Keep the dollars fixed and let the volume adjust. On a $10,000 account at 0.5% risk you can lose $50.
| Stop (EURUSD) | Loss per lot | Volume for $50 |
|---|---|---|
| 25 pips | $250 | 0.20 lots |
| 40 pips | $400 | 0.12 lots |
| 50 pips | $500 | 0.10 lots |
In the ticket, choose Risk % and enter 0.5. When you add the stop, the volume follows the distance and Risk at SL stays at about $50, whichever market you trade.
ATR and ADR in the Terminal
Open Indicators and go to Volatility. Add ATR to see the average candle size on the timeframe you trade, and ADR for the average daily range. ADR tells you how far a market usually travels in one day. If EURUSD has already moved most of its ADR by midday, a target that needs as much again is less likely.
Check the Calendar tab as well. High-impact news widens candles at once, and your plan pauses new trades from 2 minutes before to 2 minutes after it on the symbols it moves.
Mistakes to avoid
- A stop tighter than one ATR. One ordinary candle can reach it.
- Using yesterday’s ATR all week. Volatility changes. Read it before each trade.
- Raising the dollar risk because ATR is high. A wider stop calls for a smaller volume, not a bigger loss. Your daily loss limit on a $10,000 1-Step Challenge account is $500 whatever the market does.
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Trading basics in the MyFundedCapital Terminal checklist
Rules as of 17 Oct 2026. Tick each line before your next session.
1. What is the difference between market, limit and stop orders?
- A market order buys at the ask and sells at the bid, so you pay the spread the moment you enter.
- A limit waits for a better price; a stop waits for price to prove a move. Neither is sure to fill.
- Add a stop loss before you send any order; the ticket shows what it costs against both loss limits.
2. How do you read a price chart?
- Each candle is one period: its body runs from open to close, its wicks to the high and low.
- Read top-down: direction on 1D or 4h, structure on 1h, entry on 15m or lower.
- Your planned stop shows on the chart as a line, so you see the risk before you send.
3. Which candlestick patterns should a beginner know?
- Body = open to close, wicks = the extremes. Long wicks show where price was rejected.
- A pattern counts only after its candle closes, and only at a level you marked earlier.
- Put the stop beyond the pattern’s wick and size the trade from that distance.
4. What are support and resistance levels?
- Mark levels on 1D and 4h first; they carry more weight than levels found on 1m.
- A broken resistance often turns into support on the retest, and the other way round.
- Stops go beyond the zone with a buffer; a stop on the line is where many others sit too.
5. How do you identify a trend in trading?
- Structure first: higher highs and higher lows up, lower highs and lower lows down.
- The higher timeframe sets the direction; the lower one only times the entry.
- A break of the last higher low puts an uptrend in question; it does not prove a reversal.
6. What are moving averages and how do you use them?
- The period counts candles, not days: a 50 EMA on 1h averages the last 50 hourly closes.
- Use the slope for direction and the line as a zone in pullbacks, not as a precise signal.
- Moving averages lag. Your stop still goes beyond structure, never just past the line.
7. What is the RSI indicator and how do you read it?
- RSI measures momentum, not value. “Overbought” is not a sell signal by itself.
- In an uptrend RSI tends to hold above the middle; in a downtrend below it.
- Use RSI to confirm a setup at a level in the trend direction, never alone.
8. What is the MACD indicator and how does it work?
- Above zero, the faster average is above the slower one: the trend leans up. Below zero, down.
- A shrinking histogram warns that momentum is fading before a crossover appears.
- MACD is built from moving averages, so it confirms; it does not predict.
9. How do you use the ATR indicator to set a stop loss?
- ATR measures how far price usually moves per candle. It says nothing about direction.
- A stop tighter than one normal candle is often hit by noise, not by a failed idea.
- When ATR rises, the stop widens and the volume shrinks. The dollars at risk stay the same.
10. How do you confirm a trading signal before you enter?
- A signal needs context, location and a trigger. One of the three alone is a guess.
- Use one tool per job; three oscillators agreeing are one opinion, not three.
- Expert advisors and trading bots are allowed only by agreement: write to support first.
11. What is the risk-reward ratio in trading?
- R:R = distance to the stop : distance to the take profit. Both come from the chart.
- At 1:2 about one winner in three breaks even before costs; at 1:1 you need one in two.
- Set the target at the next level. A ratio you want is not a ratio the chart offers.
12. Where should you place a stop loss?
- The chart sets the stop’s place; your risk per trade sets the size. Never the other way round.
- Every order should carry a stop; the ticket warns when the loss is not limited.
- Move a stop only in your favour, and only for a reason on the chart.
13. How do you size a position in the MyFundedCapital Terminal?
- Size from the stop and a fixed risk; the volume is the result, not the starting point.
- Risk % mode sizes from a share of equity and shows Risk at SL before you send.
- Fit to limits is a ceiling. Your own risk per trade is usually far below it.
14. What should you record in a trading journal for every trade?
- Write the reason before you enter; reasons written afterwards tend to fit the result.
- Measure results in R, so trades of different sizes and markets compare fairly.
- Review once a week on a day you are not trading, and change one thing at a time.
15. How do you place your first trade step by step?
- Rehearse in the free demo: live prices and the real rules, no sign-up, orders switched off.
- Plan on the chart first; open the ticket only when entry, stop and target are clear.
- Read Risk at SL and the daily and overall limits before and after, then send.
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Questions
What is ADR?
Average daily range: how far a market usually moves from the day’s low to its high. The Terminal lists it next to ATR in the Volatility category.
Does ATR work on crypto and gold?
Yes. BTCUSDT, ETHUSDT and XAUUSD often show large ATR values in dollars, so stops are wider and the volume smaller for the same risk.
Related lessons
Tools and rules
Rules shown here come from the help center and the live rulebook; your program terms apply.
