Traded Range & True ATR

7 thg 9, 2019

Black line = Trade Range from the last X periods.
Red Line = 61.8% of black line value.
Green bar = The current trade period range.
Default Value = 21 (21 days = I business month)

Generally speaking, a stock moves approximately the same value daily. Knowing the approximate value it likes to stay within calms the nerves when you see retracement of price occuring.

IE. Price average = 1.00 in a day. It move .75 within first hour then retraces in the opposite direction. There are still hours left in the trade day, so it is trading in its value range in order to not over extend itself.

This differs in calculation from the Wells Wilder version as it smooths out jumps and only examines the ranges between high and low.

A good rule of thumb is.

Stop Loss = Entry Price +/- (ATR * 1.5)
Take Profit = (1) Entry Price +/- ATR - 50% exit (Set Trailing Stop @ Entry Value), (2) Entry Price +/- ATR * 2 (50% of remaining).