Spread-to-ATR

A ratio that compares the current bid–ask spread to the market’s recent average true range (ATR). It tells you how much of the expected move is being consumed by the spread.

1 min

Why it matters

It’s a quick regime check. When the ratio is high, execution dominates the trade outcome and tight stops become fragile.

Decision use: treat this term as a risk input. If you can’t observe it, you can’t size for it.

Common trap

Using fixed stops and targets while the spread changes. You think you’re trading the same setup, but your effective risk changed.

Example

If EURUSD ATR(14) on your timeframe is 10 pips and the spread is 1 pip, spread-to-ATR is 10%. If the spread widens to 3 pips, it’s 30%, and many ‘tight’ trades stop working.

Operational cue: if you can’t point to it on the chart, in the DOM, or in your broker logs, treat it as a story and trade smaller.

Notes

Quick rule

If you see this repeatedly, you are in a different regime than your model assumes.
Regime change usually means position size change.
When in doubt: trade smaller, or don’t trade.