Parameters
Overview
Section titled “Overview”ATR has two parameters: Smoothing Period (RMA lookback) and Candle Period (bar aggregation).
Smoothing Period
What It Controls: RMA smoothing for the True Range values.
Default: 14 bars
How It Works:
- Lower values (5–10): ATR responds quickly to volatility changes
- Standard (14): Balanced smoothing
- Higher values (20–30): Very smooth ATR, only captures major volatility shifts
What Happens at Extremes
Period = 5
- ATR spikes and drops quickly
- Good for short-term volatility assessment
Period = 21
- ATR changes very slowly
- Better for major trend volatility
Timeframe Recommendations
| Timeframe | Recommended | Notes |
|---|---|---|
| 1-Hour | 14 | Standard |
| 4-Hour | 14 | Standard |
| Daily | 14–20 | Smoother |