The Average True Range (ATR) is a key tool for analyzing market volatility, and Thinkorswim (TOS) makes it easy to add and customize this indicator. Whether you’re trading stocks, options, or futures, knowing how to use ATR on Thinkorswim can help improve your entries, exits, and stop-loss logic.
This tutorial walks you through a step-by-step setup of ATR in Thinkorswim.
Why Use ATR on Thinkorswim?
Thinkorswim offers:
- Highly customizable charting tools
- Built-in ATR indicator
- Advanced studies and scan features
- Real-time alerts based on ATR
This makes it ideal for volatility-based trading strategies.
✅ How to Add ATR on Thinkorswim (Chart View)
- Open Thinkorswim and go to the Charts tab
- Click on Studies > Add Study > Volatility Studies > Average True Range
- ATR will appear in a sub-panel below your price chart
- To customize, click on the gear icon next to the ATR label
- Adjust the length (default is 14), line color, and plot style
- Click OK to apply
Customizing ATR Settings
| Option | Description |
|---|---|
| Length | Standard is 14; lower for faster signals |
| Plot color | Choose a color that stands out from background |
| Scaling | Use default or adjust for better visibility |
You can also duplicate the study to track multiple ATRs (e.g., 14 and 21) for comparison.
✅ How to Set Up ATR-Based Alerts
- Right-click on the ATR study line in the chart
- Select “Create Alert…”
- Choose condition (e.g., ATR crosses above 3)
- Set the trigger method: once, every time, or only when true
- Select how you want to be notified (pop-up, sound, email, SMS)
- Click Create
Now Thinkorswim will alert you when ATR conditions are met—perfect for catching volatility spikes.
Using ATR for Trade Management on TOS
- Stop-Loss: Use ATR × 1.5 or 2 to place stops
- Position Sizing: Base trade size on ATR percentage to normalize risk
- Strategy Filtering: Avoid trades when ATR is flat or at extreme highs
Bonus: ATR Scans in Thinkorswim
You can build custom scans using Thinkorswim’s Scan tab:
- Go to Scan > Stock Hacker
- Click Add filter > Study
- Select Average True Range
- Set conditions like “ATR is greater than 2”
- Hit Scan to get a real-time list of qualifying symbols
This is perfect for volatility-based breakout trading or filtering low-risk setups.
Final Thoughts
The Average True Range on Thinkorswim gives you everything you need to monitor market volatility and manage trades with confidence. From advanced alerts to scanner integration, TOS makes ATR easy to use and deeply customizable for all traders.
✅ FAQs
1. Is ATR pre-installed on Thinkorswim?
Yes, it’s available under Volatility Studies in the Studies menu.
2. Can I use ATR in thinkScript strategies?
Absolutely. ATR is accessible for custom strategies and backtesting.
3. What’s the default ATR setting in TOS?
14-period ATR is the standard, but you can modify it.
4. Can I set ATR-based alerts on multiple charts?
Yes, alerts are chart-specific, but you can duplicate them across workspaces.
5. Is Thinkorswim free to use?
Yes, Thinkorswim is free with a TD Ameritrade account—even for paper trading.
