Question 1

What is ATR in trading?

Accepted Answer

Average True Range (ATR) is a volatility indicator that measures the average range between high and low prices over a specified period (typically 14 bars). It helps traders understand how much an asset typically moves, which is useful for setting stop losses.

Question 2

What ATR multiplier should I use for stop loss?

Accepted Answer

Common ATR multipliers are: 1-1.5x for tight stops and scalping, 2x for standard swing trading, and 2.5-3x for trend following and position trading. The right multiplier depends on your trading style and risk tolerance.

Question 3

How do you calculate stop loss using ATR?

Accepted Answer

For long trades: Stop Loss = Entry Price - (ATR × Multiplier). For short trades: Stop Loss = Entry Price + (ATR × Multiplier). For example, with an entry at 100, ATR of 5, and 2x multiplier: Long stop = 100 - (5 × 2) = 90.

Question 4

What is a typical ATR value for ES futures?

Accepted Answer

The S&P 500 E-mini (ES) futures typically have an ATR of around 15 points on a daily timeframe, though this varies with market conditions. During high volatility periods, ATR can be significantly higher.

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