ATR Stops

How Average True Range sets protective distance based on live volatility.

intermediate 6 min Demo Lesson
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intermediate

ATR Stops

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Beginner Explanation

ATR (Average True Range) measures how much an instrument moves on average. Signal Compass uses ATR to place stops that respect real volatility — not arbitrary pip counts.

Step-by-Step Walkthrough

  1. Open the Risk Calculator to see the ATR value for your instrument.
  2. Note the ATR multiplier used for stop-loss placement.
  3. Compare ATR-based stops to fixed-pip stops on a chart.
  4. Understand how ATR expands during news and shrinks during Asian session.
  5. See how ATR affects position size automatically.

Helpful Tips

  • Wider ATR = smaller position size (risk stays constant).
  • ATR adapts, so your stops adapt automatically.
  • Use lower ATR multipliers for retests, higher for breakouts.

Common Mistakes

  • Using tight fixed stops on high-ATR instruments like Gold.
  • Ignoring ATR expansion around news releases.
  • Manually shrinking ATR stops to 'fit' a bigger position.

Best Practices

  • Trust the calculated stop — do not overwrite manually.
  • Review ATR conditions before each session.
  • Reduce trade count in extreme-volatility environments.

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