How do I set a stop loss using the ATR indicator?

To set a stop loss using the ATR indicator, you can subtract a multiple of the ATR from the entry price for a sell position or add it to the entry price for a buy position. Common multiples are 1.5 or 2 times the ATR, which adjusts for the stock's volatility. What is considered a good ATR value in trading?

How do I use a multiple of the ATR indicator?

Using a multiple of the ATR indicator is simple: All this means is that from a point you decide, you would add or subtract any of those amounts from the price for your stop loss level. One thing to keep in mind, the correct average true range reading will not be known until the closing price of the candlestick closes.

How do you use ATR stops?

While there are other ways to address your stop placement including using support resistance levels, previous day high or low, and even trend lines, the ATR stops use market volatility. As a volatility indicator, the average true range will adjust depending on the condition of the instrument you are trading.