ATR-Based Stop-Loss Placement
A 1-minute lesson from the MarketPro academy, one of 24 in trading strategies.
Average True Range (ATR) measures the typical size of price movement over a given period, providing a way to gauge current volatility. Some traders use ATR to set stop-loss distances that adapt to how much an instrument is actually moving, rather than using a fixed number of points or pips for every trade.
Average True Range (ATR) measures the typical size of price movement over a given period, providing a way to gauge current volatility. Some traders use ATR to set stop-loss distances that adapt to how much an instrument is actually moving, rather than using a fixed number of points or pips for every trade.
Why A Fixed Stop Can Be A Problem
A stop-loss set at a fixed distance regardless of conditions may be far too tight during a volatile period, getting hit by normal price noise before a trade has a chance to work, or unnecessarily wide during a calm period, risking more than the situation requires.
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Not investment advice. Past performance is not indicative of future results.