ATR, Bollinger Bands and volatility-based stops

Calculate ATR, use it to set a stop distance, and size the position from that stop.

Module 22 of 26, Reading a chart. Lesson 6 of 7, about 16 minutes.

The takeaway

ATR measures volatility; use it to set stop distance and adjust position size so all trades risk the same amount.

This page is a public summary. The full lesson has the worked examples, an interactive exercise and a short quiz, and sits in the course. Lessons 1 and 2 of Module 1 are free and the rest need a pass.

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General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.

Concepts in this lesson

• Average True Range (ATR)
• Bollinger Bands
• Volatility
• Stop loss

Previous lesson

• Chart patterns and trendlines: a named shape is not a test

Next lesson

• How a chart can fool you: log scale, splits, dividends and cropped axes

Related lessons

• Stop losses and take profits
• Fear gauges: the VIX, funding and sentiment
• Implied volatility as an expected move, and the VIX
• Protective puts: insurance a gap cannot skip

This lesson's module

• Reading a chart
• All 26 modules and 157 lessons