The ATR acts as a tighter stop loss on your entry, because it will take you out in
a matter of a few days if the trend reverses, and lock in more profits late in a
trend by taking you out much faster. The downsides to the ATR stop is that you
can be stopped out of a trend faster and miss some larger trends by being shaken
out prematurely on pullbacks. You have to choose whether to risk more and
attempt to maximize gains, or be willing to give up some returns to reduce your
drawdown.
The other two trend following systems work the same as the original example
just on different timeframes.
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