ATR Trailing Stops

ATR Trailing Stops are a way of using the principles behind Average True Range - a measure of the degree of price volatility - and using it to set trailing stop-losses.

The idea is that ATR gives a guide to the average volatility of price movements over a given period, making it easier to be more precise about where to set the stop-loss.

True Range is calculated by looking at the daily price change and using the greater of three calculations: (high – previous close), (previous close – low) or (high – low).

In the case of ATR Trailing Stops, the Average True Range is the True Range calculation over a default 21-day period average.

A multiple of the ATR - in this case a default multiple of 3 - is plotted around the ATR line.

These settings can be adjusted by launching the ATR Stops settings modal.

Note that when the ATR Trailing Stop line is Red, it represents the Buy Stop (if you were ‘long’ this is where you would sell). When the line is Green, it represents the Sell Stop (if you were ‘short’ this is where you would sell).