House of Traders: Show ATR, DTR, Shs Float and Next Earnings Indicator by cornevanginkel
For instance, if you are trading a very volatile instrument indicated by a huge ATR value, reduce the amount you invest to avoid excessive losses. Otherwise, you may wish to increase your trading position size if the ATR value is small. The indicator uses the formula above to evaluate the first ATR for the considered asset. It uses a different and less complex formula for subsequent periods as follows.
Real-Life Example: Using the ATR to Adjust Position Size
Assuming a valid sell signal...