Calculate the range input
For each candle after a previous close is available, true range is the largest of the candle's high minus low, the absolute high minus previous close, and the absolute low minus previous close. Wilder ATR starts from an initial average and updates using [previous ATR × (period − 1) + current true range] ÷ period. Use completed candles with consistent spacing. The most recent ATR describes the range scale in the submitted sample and changes when you alter its interval or period.
Translate distance into long and short levels
Stop distance equals ATR multiplied by the chosen stop multiple. For a long scenario, subtract this distance from entry to obtain the stop and add distance multiplied by reward-to-risk to obtain the target. For a short scenario, add the distance for the stop and subtract the target distance from entry. These are price differences before trading fees, funding or slippage. A nominal two-to-one target ratio can therefore produce a lower net payoff ratio after the complete trade costs are included.
Use position size as a separate decision
ATR measures historical movement without determining trade direction, execution quality or the probability that either level will be reached first. A wider stop increases loss per unit if position quantity stays fixed. Use the position size calculator to connect that distance with a chosen equity budget. Reject nonpositive derived price levels and check exchange price increments before using a plan. This page does not know maintenance margin, liquidation price or order-trigger conventions, so an ATR stop cannot establish that a leveraged position survives until execution.