ATR plus spread: the number that tells you whether to trade at all
Posted: Thu Oct 29, 2026 6:56 am
Here is a ratio worth tracking: the average range of a short bar divided by the current spread. It answers a simple question. Is there enough movement here to pay for the cost of getting in and out?
Suppose the one-minute average range is four pips and the spread is one pip. The ratio is four. That is a reasonably healthy environment for a scalper aiming at small targets.
Now suppose the range falls to two pips while the spread widens to 1.5. The ratio is about 1.3. Almost everything the market offers goes to costs. Even a strategy with a genuine edge struggles to produce profit.
Plotting this ratio across the day shows exactly when conditions favour scalping and when they do not. Most pairs show a clear pattern, with healthy values during the London and New York sessions and poor values in the Asian lull or around rollover.
Setting a minimum threshold, like a ratio of three, and refusing to trade below it removes a large number of poor trades without changing the strategy itself.
Plotting the ratio on a separate pane below the chart with a horizontal line at the minimum threshold gives a simple visual signal. Green zones allow trading, and red zones mean waiting. The simplicity helps discipline.
What ratio of range to spread do you consider the minimum for a scalp to be worth taking?
Suppose the one-minute average range is four pips and the spread is one pip. The ratio is four. That is a reasonably healthy environment for a scalper aiming at small targets.
Now suppose the range falls to two pips while the spread widens to 1.5. The ratio is about 1.3. Almost everything the market offers goes to costs. Even a strategy with a genuine edge struggles to produce profit.
Plotting this ratio across the day shows exactly when conditions favour scalping and when they do not. Most pairs show a clear pattern, with healthy values during the London and New York sessions and poor values in the Asian lull or around rollover.
Setting a minimum threshold, like a ratio of three, and refusing to trade below it removes a large number of poor trades without changing the strategy itself.
Plotting the ratio on a separate pane below the chart with a horizontal line at the minimum threshold gives a simple visual signal. Green zones allow trading, and red zones mean waiting. The simplicity helps discipline.
What ratio of range to spread do you consider the minimum for a scalp to be worth taking?