For Business

Risk & Money Management

How to Use ATR to Place a Stop

An ATR stop is the typical day — the average true range, read off the platform's window — multiplied by a number the trader chooses and measured from the price. This paper shows you the euro against the dollar on 17 December 2025 worked through in three steps, from a 54.9-pip typical day to a stop at 1.16574 and a size of 0.12 lot for 100 dollars; the idea as an anchor chain paid out to the sea state; the two lines and the ATR box on the daily chart, with the day the stop's price traded; what one bar's true range is made of; and the ATR window on your platform, whose value reads in price and not pips.

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

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Read it, multiply it, subtract it

An ATR stop is three steps. Take the euro against the dollar at its 17 December 2025 close, 1.17398. First, read the typical day: ATR 14, the average true range over fourteen days — how far the price has usually moved in a day lately — was 0.00549 on the platform's window, which is 54.9 pips. Second, multiply by a number the card chooses, one and a half as an example: 82.4 pips. Third, subtract it from the price for a buy: 1.17398 minus 0.00824 is 1.16574. On a 10,000-dollar example account risking one per cent, the size that makes that stop worth 100 dollars is 0.12 lot. The typical day is read, not chosen.

An anchor chain

Picture a boat at anchor. In a calm sea a little chain holds; in a rough one the same chain snaps, so a sailor pays out more chain as the waves get bigger. ATR is the sea state, read off the water every day — 54.9 pips of wave on 17 December, 125.6 on 10 April — and the multiple is how much chain is paid out per foot of wave. The boat is the price; the chain is the stop's distance. The same multiple pays out more chain in a rough month and less in a calm one, and the sailor never has to guess the weather, only read it off the window.

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