The ATR (Average True Range) Trailing Stop indicator is used by charting technicians to determine stop loss levels for order entry and exit. It's based on the Average True Range (ATR) of a stock, which is a measure of its volatility. The ATR Trailing Stop is calculated by multiplying the current ATR value by a user-defined factor and then adding or subtracting that value from the stock's closing price. The resulting value is the indicator’s stop loss level, which trails behind the stock's price as it moves in the desired direction.
The following parameters can be adjusted based on the individual trader's preferences and risk tolerance:
Trail Type: Modified – true range values are transformed to improve chart view
ATR Period: The number of ticks for ATR calculation
ATR Factor: ATR Multiplier
First Trade: Defines calculation for either a long or short position
Average Type: Exponential, Hull, Simple, Smoothed, Weighted, Wilder’s
ATR Trailing Stop Indicator on chart
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.