ATR and smart stops

Give the trade room to breathe

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In this lesson

Measure normal volatility with ATR and use it to place stops that are not too tight or too wide.

Key takeaways

ATR measures how much a market normally moves per period.
Stops placed 1.5–3 ATR away sit outside everyday noise.
Position size = money at risk ÷ stop distance.
Higher volatility → wider stops → smaller positions, so the dollar risk stays constant.

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