How to set a stop loss with ATR — The ATR Race

So here's the lesson about that number. It's the ATR — the average true range. It isn't telling you which one wins. It tells you something else.

What it tells you is how rough the ride is going to get. How the fight is going to look, and how bloodied each opponent will be at the end of that fight. And about how much room that trade needs to move and succeed.

A small breath, small swings, tighter room. A big breath, big swings — and a stop parked inside that breath, you are a target waiting to be shot out of the sky.

That dial never picks the winner. What it tells you, every single time, is the size of the swings on the way, and how much room your plan's gonna need.

Every stock has a normal day. Average true range tells you how big that day is going to be.

Start with one day: the high minus the low — how far the price travelled. “True” means the gap counts too: if it opened well above or below the day before's close, that jump is part of the move for that day.

Now do that for the last fourteen days and average them. That's the ATR, and it comes out in dollars. Divide it by the price and you get a percent — seven percent means that name swings about seven percent on an ordinary day.

Then the stop is measured in those, not in a flat percentage. Ten percent is a different bet on every stock: on calm names, eighty-five of every hundred winners never dipped past about seventeen percent before the move paid; on the wildest third, about forty-three.

On the name in the video, about three of its own ranges down stopped out twenty-five of every hundred winners; four and a half, fifteen; five and a half, ten. The stop sits outside the stock's normal wiggle, so an ordinary day can't take you out.

And a wider stop doesn't mean a bigger loss. The stop's distance belongs to the stock; the loss belongs to you — one or two percent of your account. A wider stop simply buys fewer shares, and the amount at risk never moves.

You don't have to work any of that out. Olympia calculates it for every signal.

It sets the entry zone — one ATR either side of today's centre, measured on the same clock the signal runs on. On the scanner it has a column of its own, ATR % (daily): the average true range over fourteen daily bars as a percent of the close.

And where you log a trade it lays out the stop menu with the counts in the box beneath it, works the share count off your own risk, and keeps the floor once a trade has paid.

Safe going in, safe on the account, the win kept — all decided before you're in, when you're thinking clear.