Forex & Stocks ATR Trailing Stop Trading Indicator and Strategy

ATR Trailing Stop Trading Indicator and Strategy – Time your Exits with Average True Range (ATR) Trailing Stops. ATR Trailing Stops are primarily used to protect capital and lock in profits on individual trades but they can also be used, in conjunction with a trend filter, to signal entries.

Average True Range (“ATR”) was introduced by J. Welles Wilder in his 1978 book New Concepts In Technical Trading Systems. ATR is a measure of volatility for a stock or index and is explained in detail at Average True Range.

Wilder experimented with trend-following Volatility Stops using average true range. The system was subsequently modified to what is commonly known as ATR Trailing Stops.

• Download “ForexWOT-ATRtrailingstopSystem” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “ForexWOT-ATRtrailingstopSystem.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “ForexWOT-ATRtrailingstopSystem” trading system and strategy.
• You will see the “ATR Trailing Stop System” is available on your Chart.

 

Signals are used for exits:

• Exit your long position (sell) when price crosses below the ATR trailing stop line.

• Exit your short position (buy) when price crosses above the ATR trailing stop line.

 

ATR Trailing Stops Evaluation – Average True Range Trailing stops are far more volatile than stops based on moving averages and are prone to whipsaw you in and out of positions except where there is a strong trend. That is why it is important to use a trend filter.

Average True Range Trailing stops are more adaptive to varying market conditions than Percentage Trailing Stops, but achieve similar results when applied to stocks that have been filtered for a strong trend.