Technical Analysis
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ATR for risk management
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ATR for risk management
How to use the ATR Indicator for placing your Stop Loss and for calculating the Pip Value.
First you have to calculate the amount of $ you want to risk on that trade.
(example: 50.000$ Account , Risk 2%)
50.000*0.02=1000$
Second you want to figure out where to put your stop loss by using the ATR Indicator.
Apply the ATR indicator onto your Chart and then use the number from last closed candle.
(example: EUR/USD, Daily Chart, ATR 0.0886)
The ATR is showing 0.0886, that means the currency has moved over last 14 candles on average 88 Pips.
Now you multiply that number (88Pips) times 1.5 to give your stop loss a little more room.
88*1.5=132 Pips
Now you have to either add this number to your entry price for a short trade or subtract this number from your entry price for a long trade.
(example: Short trade, ask price 1.05745)
1.05745 + 132 = 1.05877 – Price where to put your stop loss.
Now you need to calculate the pip value in order to know how many units you have to Sell Short.
Divide the amount of $ at risk by the amount of Pips from your stop loss.
(example: 1000$/132Pips=7,75$ per pip).
there you go !
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2 Replies
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Wow. Thanks nicely taught…
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Sangat bermanfaat sekali untuk pemula seperti saya menggunakan atr ini
Terima kasih sudah berbagi dengan cara yang lengkap
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