Technique Using ATR For Intraday Stop Placement
Over the past month, I have been getting stopped out left and right using the same 50 tick stops I was using in June and July. After 4 weeks of getting beat up, I just realized that it was because my stop losses have been way too small. I was always wondering why I would get stopped out by a few ticks and then the market would go in my favor, without me. I was not taking in account volatility. The 50 tick stops are not cutting it anymore and I need to upper it to 70.
I have come up with my own way of using ATR to find my best stop size when intraday trading on the 15-minute chart.
I mark the clusters of the peaks with a top/bottom and 50% line. Just like RSI's zero line, the 50% line is the stop I need to use. In this case, I need to be using 70 tick stops. My targets are always 2.5 times my stops. In this case 70 x 2.5= 175
I hope this can help anyone; I need to increase my stop sizes to avoid getting stopped out needlessly.
I have come up with my own way of using ATR to find my best stop size when intraday trading on the 15-minute chart.
I mark the clusters of the peaks with a top/bottom and 50% line. Just like RSI's zero line, the 50% line is the stop I need to use. In this case, I need to be using 70 tick stops. My targets are always 2.5 times my stops. In this case 70 x 2.5= 175
I hope this can help anyone; I need to increase my stop sizes to avoid getting stopped out needlessly.
Note
Using the Daily chart, the ATR is a bit lagging behind but is helpful in picking absolute tops and bottoms. When ATR spikes, that is near the lows. When ATR is near the lows and starts to pick up, this is near the highs
Note
Looking at the VIX daily chart, you can see that it is near identical to the Daily 14 period ATR.
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