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How to Set a Stop With ATR

A stop set with ATR is a stop placed a fixed multiple of the average true range from the price: the multiple stays the same, and the distance changes with how far the days have been travelling. This paper shows you the same one-and-a-half-times rule on two of gold's real days in 2025, 131 dollars in April and 62 in July, the idea as a driver's following distance that grows with speed, ATR under the daily chart, the four common multiples and what each is worth at one lot, and how the distance is entered in points on your platform.

Difficulty
Beginner
Reading time
5 min
Pages
8
Reviewed by
Saman Rahbar

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The same rule, two distances

A stop set with ATR is a stop placed a fixed multiple of the average true range from the price. ATR is how far a day has been travelling lately, top to bottom, averaged over fourteen days. On 22 April 2025 gold's ATR was 87.48 dollars, so a stop one and a half times ATR from the close sat 131 dollars away. On 18 July its ATR was 41.44, and the same rule put the stop 62 dollars away. The rule did not change between the two days. The distance did, because the days had.

Following distance

The picture is following distance on a road. A careful driver keeps the same two seconds behind the car in front whatever the speed, and in metres that gap is short in town and long on the motorway. A stop set with ATR is the same rule. ATR is the market's speed; the multiple is the seconds; and the stop's distance in dollars or pips is what falls out of the two. The rule does not change with the road. The distance does.

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