ATR Settings: Comparison Bars Mattered More Than Period
ATR period 14, calculation, and platform setup explained. In 720 USD/JPY runs, the comparison window changed trades and profit more than the ATR period.
Average True Range (ATR) measures how far price moves per bar. It ignores whether the move was up or down and turns intrabar range and price gaps into one volatility line.
Period 14 is the familiar default. But across 60 combinations of periods 5 to 50, comparison windows from 1 to 20 bars, and rising or falling ATR, the comparison window changed the result more than the ATR period did. On the hourly chart, the one-bar comparison averaged −562.6 pips in 2024 and −1,149.2 in 2025.
Falling ATR over ten bars with period 20 made +3,022.6 pips in 2024 and +2,184.5 in 2025. A default-like period 14, five-bar comparison with rising ATR lost 639.6 and 393.1 pips. Period 20 is not a universal answer: changing the period alone did not repair a weak reading of the line.
What ATR measures
ATR starts with True Range, the largest of three distances:
- Current high minus current low
- The distance between the current high and the previous close
- The distance between the current low and the previous close
If the current candle spans ten pips but opened away from the previous close, True Range keeps the larger gap-inclusive distance. MetaTrader 5's ATR documentation gives the same three-part calculation.
Formiq smooths True Range with Wilder's recurrence. For period N, the newest True Range receives a weight of 1/N and the previous ATR receives (N−1)/N.
| Period | Weight of newest bar | Bars until old influence halves |
|---|---|---|
| 5 | 20.0% | 3.11 |
| 14 | 7.1% | 9.35 |
| 50 | 2.0% | 34.31 |
ATR(14) is not a simple average that forgets everything after 14 bars. It absorbs 7.1% of each new True Range while the older influence decays gradually.
ATR has no trade direction
True Range uses absolute distances, so ATR cannot fall below zero. A crash and a rally can both lift it. TradingView's official ATR guide explicitly describes ATR as a volatility measure rather than a price-direction indicator.
The tested rule therefore did not invent a side from ATR. When ATR was above or below its value a specified number of bars earlier, price rising over those same bars opened a long and price falling opened a short. The opposite price direction closed the trade while the ATR regime still held.
ATR settings and signals
ATR appears as one line in a separate pane below price. It has no standard 30/70-style guide levels.
| Platform | Where to add it |
|---|---|
| MT4 / MT5 | Insert → Indicators → Oscillators → Average True Range |
| TradingView | Search Indicators for Average True Range |
| Formiq | Pick ATR from the indicator list |
Chart settings
| Input | Default | What it changes |
|---|---|---|
| Period | 14 | How quickly True Range is smoothed |
| Line colour and width | Platform-dependent | Appearance only |
The standard MetaTrader ATR calculation exposes the period. TradingView starts at 14 and lets the smoothing change among RMA, SMA, EMA and WMA. Formiq exposes the period and line appearance and uses Wilder smoothing for the calculation.
Backtest settings
| Input | Starting value | What it does |
|---|---|---|
| Reading | ATR rising | Chooses whether ATR must be above or below its earlier value |
| Period | 14 | Sets the response speed of the ATR line |
| Comparison bars | 5 | Looks this many bars back for both ATR and price direction |
The common interpretation is to read rising ATR as expanding movement and falling ATR as contraction. Neither supplies a side; price direction, a breakout, or another directional rule is still needed.
Across the 60 settings, changing the period left mean hourly trade count between 815 and 828 in 2025. Changing the comparison window moved it from 1,569.8 trades at one bar to 337.8 at 20 bars. The comparison window, not the period, was the main trade-frequency control.
How this was measured
| Item | Value |
|---|---|
| Pair | USD/JPY |
| Window | 2025, repeated in 2024 and split into first and second half of 2025 |
| Timeframes | 15-minute / 1-hour / 4-hour |
| Readings | ATR rising / ATR falling; price direction from the same comparison window |
| ATR periods | 5, 10, 14, 20, 30, 50 |
| Comparison windows | 1, 3, 5, 10, 20 bars |
| Runs | 60 settings per cell; 3 timeframes × 4 windows = 720 |
| Exit | Opposite signal; entry and exit share one rule set |
| Fill and cost | Close, fixed 0.3-pip spread, 0.1 lot |
| Stops and targets | None in the main sweep; tested separately |
Pips were recalculated from each trade's fill prices.
The hourly chart kept 29 of 60 settings in both years
Counts profitable in both 2024 and 2025:
| Timeframe | Profitable 2024 | Profitable 2025 | Both years | 2024 median | 2025 median |
|---|---|---|---|---|---|
| 15-minute | 24/60 | 9/60 | 6/60 | −312.8 | −1,205.8 |
| 1-hour | 36/60 | 39/60 | 29/60 | +532.5 | +954.9 |
| 4-hour | 50/60 | 22/60 | 22/60 | +1,674.2 | −711.6 |
Only the hourly chart had a positive median in both years. The 15-minute chart traded often and its median setting lost in both years. Four-hour settings reversed from 50 of 60 profitable in 2024 to 22 of 60 in 2025.
The comparison window separated results more than the period
Each row averages 12 hourly settings across both readings and all six periods.
| Comparison bars | Mean 2024 | Mean 2025 | Mean trades 2025 |
|---|---|---|---|
| 1 | −562.6 | −1,149.2 | 1,569.8 |
| 3 | +794.5 | +1,146.4 | 940.8 |
| 5 | +163.4 | +676.6 | 727.0 |
| 10 | +869.6 | −40.6 | 517.8 |
| 20 | +773.9 | +856.9 | 337.8 |
The one-bar comparison lost in both years and traded 4.6 times as often as the 20-bar version. Reclassifying ATR as up or down on every small one-bar change generated too much turnover.
Mean trade count by ATR period stayed between 815 and 828 in 2025. Period 5 led mean net profit in both years at +743.5 and +561.7 pips, but other periods did not preserve their ordering: period 30 moved from −106.2 to +310.3, while period 14 fell from +475.2 to +200.0. Nothing in the grid made 14 uniquely strong.
Falling ATR had a positive mean in both years
| Reading | Mean 2024 | Profitable 2024 | Mean 2025 | Profitable 2025 |
|---|---|---|---|---|
| ATR rising | −97.9 | 13/30 | +245.9 | 19/30 |
| ATR falling | +913.5 | 23/30 | +350.1 | 20/30 |
Following price while volatility expanded had a negative mean in 2024. Falling ATR averaged a profit in both years, but the 2025 profitable counts were nearly tied at 20 of 30 versus 19 of 30. The ATR regime alone did not select a robust setting.
Two of six one-year winners lost in the other year
The best setting in one year was run unchanged in the other:
| Timeframe | Selection year | Setting | Selection year | Other year |
|---|---|---|---|---|
| 15-minute | 2025 | Rising / 10 / 10 | +1,226.1 | 2024 +970.0 |
| 15-minute | 2024 | Rising / 14 / 20 | +2,503.8 | 2025 −738.7 |
| 1-hour | 2025 | Falling / 10 / 5 | +2,541.7 | 2024 +341.8 |
| 1-hour | 2024 | Falling / 20 / 10 | +3,022.6 | 2025 +2,184.5 |
| 4-hour | 2025 | Falling / 10 / 3 | +2,809.6 | 2024 +2,359.1 |
| 4-hour | 2024 | Falling / 5 / 1 | +4,225.7 | 2025 −596.7 |
Two of the six transfers lost money. The 2025 hourly winner stayed positive in 2024 at +341.8 pips, but finished below the 2024 median of +532.5.
The hourly falling-ATR, period-20, ten-bar setting made +1,166.9 pips in the first half of 2025 and +993.5 in the second. Its survival was not confined to one half, but period 20 cannot be separated from the falling reading, ten-bar comparison and hourly chart that produced it.
Period 14 with rising ATR lost on the hourly chart in both years
The chart default period with the strategy builder's five-bar starting window:
| Timeframe | Year | Trades | Win rate | Net |
|---|---|---|---|---|
| 15-minute | 2024 | 2,111 | 35.20% | +68.4 pips |
| 15-minute | 2025 | 2,292 | 33.77% | −807.1 pips |
| 1-hour | 2024 | 577 | 34.32% | −639.6 pips |
| 1-hour | 2025 | 574 | 32.40% | −393.1 pips |
| 4-hour | 2024 | 127 | 35.43% | −558.6 pips |
| 4-hour | 2025 | 139 | 37.41% | −860.1 pips |
A common chart period is not automatically a trading-rule default. Only the 15-minute 2024 cell was profitable.
A 35% win rate still worked when wins were twice as large
The hourly falling-ATR, period-20, ten-bar setting:
| Year | Trades | Win rate | Mean win | Mean loss | Net |
|---|---|---|---|---|---|
| 2024 | 628 | 35.51% | +54.66 pips | −22.63 pips | +3,022.6 pips |
| 2025 | 601 | 36.94% | +51.75 pips | −24.55 pips | +2,184.5 pips |
Its win rate stayed below 40%, while the mean win was more than twice the mean loss. Ranking ATR settings by win rate would discard that payoff difference.
ADX and stops did not improve both years
The same hourly setting with one addition at a time:
| Addition | 2024 | 2025 |
|---|---|---|
| None | +3,022.6 | +2,184.5 |
| ADX(14) at 20 or above | +646.9 | −572.2 |
| Exit after 24 bars | +2,840.5 | +2,482.2 |
| Stop 50 / target 100 pips | +2,942.2 | +1,472.7 |
| Stop 1 ATR / target 2 ATR | +1,940.0 | +554.9 |
| Stop 2 ATR / target 3 ATR | +1,456.6 | +1,151.7 |
The 24-bar exit added 297.7 pips in 2025 but removed 182.1 in 2024. ADX and all four stop/target cases failed to beat the baseline in both years.
An ATR-sized stop adapts the unit to current volatility; it does not create an exit edge by itself. In this sample, the fixed 50/100-pip exit finished ahead of both ATR exits in both years, and all three trailed the signal-only baseline.
A one-pip spread removed 600.9 pips from 601 trades
The same 2025 candidate:
| Spread | Trades | Net |
|---|---|---|
| 0 | 601 | +2,364.7 pips |
| 0.3 | 601 | +2,184.5 pips |
| 1.0 | 601 | +1,763.8 pips |
| 2.0 | 601 | +1,162.8 pips |
The break-even spread was 3.93 pips. Cost declines by trades multiplied by spread, so the high-turnover one-bar settings reach their limit sooner.
Related articles
- Supertrend settings: the multiplier moved the result
- Bollinger BandWidth settings and the squeeze
- Moving average disparity: percent versus ATR units
Notes
- The sample runs from 1 January 2024 through 31 December 2025; 2025 was also split into halves
- Fills use the close and the main sweep fixes spread at 0.3 pips
- ATR uses Wilder smoothing with warmup before each measured window
- MetaTrader, TradingView and Formiq expose different smoothing choices, so match the method before moving a numerical setting between platforms
Questions people ask
- What is the best ATR period?
- Period 14 is the common chart default, but it did not lead this USD/JPY test. Across periods 5, 10, 14, 20, 30 and 50 on the hourly chart, the ordering changed between 2024 and 2025. The number of bars used to compare ATR and price mattered more: a one-bar comparison had a negative mean in both years.
- Does a rising ATR mean buy?
- No. ATR has no price direction and rises during large moves either up or down. This test supplied direction from price: when the ATR condition held, a price rise over the same comparison window opened a long and a price fall opened a short.
- What ATR value counts as high?
- The timeframe has to be fixed first. On USD/JPY in 2025, the median ATR(14) was 11.21 pips on M15, 23.48 on H1 and 48.90 on H4. The same 14-period input covers a different amount of clock time on each chart.
- Was rising or falling ATR more profitable?
- Averaged over 30 hourly settings each, falling ATR produced +913.5 pips in 2024 and +350.1 in 2025; rising ATR produced −97.9 and +245.9. Yet the 2025 profitable counts were close at 20 of 30 versus 19 of 30, so the ATR direction alone did not select a setting.
- Is ATR built into MT4 and MT5?
- Yes. In MT4 and MT5, add Average True Range from Insert → Indicators → Oscillators. It starts at period 14 and draws one line in a separate pane. TradingView and Formiq also include ATR.
Formiq is a free browser-based FX terminal with replay practice and no-code backtesting. Open the chart or see what the free plan includes.