MONEY GLOBE XIndicators & Calculations · Lesson 5
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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Next lesson: Valuation: the P/E ratio
Educational information only - not financial advice.