When using ATR stops, we can ascertain appropriate position sizes by determining the max loss we are comfortable risking. Think of treating your stock trade like a call option, with max risk being the premium, or in this case, the amount lost if your stop is triggered.
We have attached a spreadsheet that can calculate this for you. We filled in the fields with a few examples for illustrative and educational purposes. These examples may not be appropriate for you. Everyone needs to determine their own risk numbers for percent of the account and for the multiple of the ATR.
The 21 Day ATR is now included in the Platform. Simply click on the chart for any day and the 21 Day ATR will be displayed. By using the Crosshair Icon and the left/right arrow on your keyboard you may view the ATR over a period of time.
You can learn more about this topic in the previous Open Forum discussion available here:
Please sign in to leave a comment.