How can you use the ATR Bands? Some videos I've seen say that you can use it as a stop loss but did not explain? Can you share how you can u
TK42DAN
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@jzunigafx, There are numerous videos out there about how to use an ATR as a stop loss. Basically, the ATR is attempting to measure volatility for a particular instrument over a set period of time. You can choose how far back you want the ATR to look in order to calculate the levels. What settings you use are ultimately up to you and based on your own risk management style. This is another reason why extensive backtesting is so important.
The bands are essentially the same as the original ATR indicator except the levels are posted for you on the chart rather than you having to do the math in order to set a stop loss or target.
There are a handful of ways people tend to use them, but two of the most common include: 1) setting a stop loss at the ATR band of the candle just before your trigger candle. That is, you want to use the ATR band associated with the candle that has already closed. 2) setting a stop loss at an ATR band level *below* a recent swing low.
Obviously the first option will usually be a tighter stop loss and the second option would be a looser one, and again, it all depends on your risk management approach. However, remember that someone using option one might use different ATR settings than someone using option 2. Like most things, it's all relative. That's trading: there's literally NO one right answer. :)
Hope that helps some. I know I'm rambling. :)
developerosmx
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hi, "cross(close, (srcLower - atr * atrMultiplierLower))" is not working. How do we know if the price is cross the lower band?
x10140
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@developerosmx, price wont cross the lower band - lower band will be always lower, use this script as stop-loss help instead