ATR stops get you out of a trade after a few bad days.
The ATR% stop method can be used for any type of trade because the width of
the stop is determined by the percentage of average true range (ATR). ATR is a
measure of volatility over a specified period of time. Normally a high ATR
indicates a volatile market, while a low ATR indicates a less volatile market. By
using a certain percentage of ATR, you ensure that your stop is dynamic and
moves with market conditions. Widen your stop in more volatile times and lower
it in less volatile markets to keep from being stopped out too soon and to account
for noise in price movement.
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