How ATR sets the stop
Average true range measures how far an asset typically moves in one bar, including gaps. A stop placed a multiple of ATR from entry sits outside normal noise for that asset on that timeframe, so it's hit by a real move rather than by the usual wobble. The ATR guide covers the indicator; the numbers here come from the reading your charting platform shows.
Choosing the multiplier
Multiples between 1.5 and 3 are common. Lower multiples get stopped out by noise more often but lose less per stop; higher multiples survive noise and lose more when hit. The timeframe matters as much as the multiple: an ATR from the daily chart is many times the ATR from the hourly chart, so the stop has to come from the same timeframe as the trade. ATR as a percentage of price is the regime gauge: when it climbs, the market is in a high-volatility phase and every stop needs more room.
From stop to position size
Once the stop distance is fixed by volatility, the position size follows from the loss you'll accept: risk dollars divided by stop distance per coin. That is the fixed-fractional rule the position sizing guide covers and the position size calculator applies to any stop. A trailing ATR stop moves with the price by the same multiple and never moves backwards, which is how many trend followers exit.
Frequently Asked Questions
The guides behind this calculator
- ATR The indicator this calculator is built on.
- Position sizing From stop distance to position size.
- Bollinger Bands The other standard volatility measure.
- Multi-timeframe analysis Why the ATR has to match the trade's timeframe.
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Formulas last reviewed 2026-10-02. Educational tool, not financial advice. Results depend entirely on the numbers you enter.