ATR Stop Loss Finder

The ATR Stop Loss Finder indicator calculates volatility-based exit levels using the Average True Range (ATR) to help traders position stop losses outside of normal market noise. It provides dynamic price levels that adjust to market volatility, reducing the likelihood of being prematurely stopped out during periods of high fluctuation.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. The indicator plots two primary lines on the chart: a High line (typically red) for short positions and a Low line (typically teal/green) for long positions. Traders use these levels to define their maximum risk per trade based on current volatility.

• Long Positions: When entering a long trade, the "Low" line serves as a suggested stop-loss level. This level is calculated by subtracting a multiple of the ATR from the chosen low source.
• Short Positions: When entering a short trade, the "High" line serves as a suggested stop-loss level. This level is calculated by adding a multiple of the ATR to the chosen high source.
• Volatility Adjustments: If the market becomes more volatile, the ATR expands, moving the stop-loss levels further from the current price. Conversely, in low-volatility environments, the stops tighten automatically.

The indicator also features a dashboard table at the bottom of the screen, displaying the current ATR value and the specific price levels for both the High and Low stop losses for quick reference.

Details

The script functions by first calculating the True Range (TR) of the asset, which considers the current high/low range and any gaps from the previous close. This value is then smoothed using a user-defined moving average (RMA, SMA, EMA, or WMA) over a specific lookback period (default is 14).

The final stop-loss levels are determined by the following logic:

1. ATR Multiplier: The smoothed ATR value is multiplied by a user-defined coefficient (default is 1.5).
2. Short Stop (High): High Source + (ATR * Multiplier)
3. Long Stop (Low): Low Source - (ATR * Multiplier)

By using the High/Low price sources as the anchor points rather than the Close price, the indicator ensures that the stop loss accounts for the extreme reaches of recent price action.

Settings

• Length: Sets the lookback period used to calculate the Average True Range.
• Smoothing: Determines the moving average type used to smooth the ATR values (RMA, SMA, EMA, or WMA).
• Multiplier: Adjusts the distance of the stop loss from the price source. A higher multiplier (e.g., 2.0) creates a more conservative stop, while a lower multiplier (e.g., 1.0) creates a tighter stop.
• High Source: Defines the price point used to calculate the short stop loss (default is "High").
• Low Source: Defines the price point used to calculate the long stop loss (default is "Low").
• Show Price Lines: Toggles the horizontal price tracking lines on the right axis.
• Style Settings: Various color inputs allow customization of the ATR text, High/Low table text, and the plotted lines on the chart.

FAQ

How do I adjust the sensitivity of the stop loss levels? You can adjust the "Multiplier" setting. Increasing the multiplier will move the stop loss further away from the price to accommodate higher volatility, while decreasing it will bring the stop loss closer for tighter risk management.

What smoothing method should I use? The default RMA (Running Moving Average) is standard for ATR calculations and provides a balanced response to price changes. EMA or WMA can be used if you want the indicator to react more quickly to recent changes in volatility.

How can I access the ATR Stop Loss Finder? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.