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ATR Stops calculates stop losses based on the Average True Range (ATR) of a stock. These are volatility-based stop losses.  It will also compute and display daily True Range measurements.  It doesn't require any advanced math on the part of the user.  You only have to enter the stock's price data and the numbers 1, 2, or 3, to tell ATR Stops how to compute a stop loss.  Stop losses can be computed relative to the high, low, or closing price.

The "True Range" tends to reflect the commitment or enthusiasm of traders.  For example, if traders are willing to keep bidding up or selling down a stock throughout the day, then ranges will tend to be large or increasing.  Conversely, if there is a lack of interest, ranges will tend to be small or decreasing.

The Average True Range (ATR) is the average of the True Range over a given period.  It is a measure of volatility first introduced by J. Welles Wilder in his book, New Concepts in Technical Trading Systems.  Wilder recommended a 14-day average of the True Range.  According to Wilder, large ATR values tend to occur at market bottoms after a panic sell-off (volatility is high).  Small Average True Range values tend to occur when volatility is low.  An example would be during times of prolonged sideways movement (as when a market it topping out or undergoing consolidation).

This program calculates the Average True Range the same way J. Welles Wilder calculated it.  It uses the same approach to data "smoothing" specified by Wilder's formula.  Many ATR calculators use a smoothing approach that is not authentic.  For example, they will use an exponential averaging approach commonly used in stock charting today but that was not recommended by Wilder.

Data is entered vertically by date in up to 100 rows. This provides room for about 5 months of data. If the user wants to track a stock longer than for 5 months, he can simply copy the last 20 days worth of data from the bottom to the top, delete the rest, and continue from there. [Do not use Cntl-X or Cntl-V because that would permanently damage the program.  The data at the bottom must be copied and pasted at the top.  Them, the old data can be deleted with the keyboard delete key, but NEVER with the delete function on the Edit menu]  Thus, a stock can be tracked for years if desired.

Note the layout of rows 4 and 5 for columns A through I.  Cell D-4 is where a person can enter a "Multiplier."  For example, if a person wants computations to be based on twice the Computed True Range, he or she would enter 2 in cell D-4.  It is also possible to enter decimals.  For example, if a person wants calculations to be based on 1.25 times the computed True Range, he or she would simply enter 1.25 in cell D-4.

ATR Stops incorporates tremendous flexibility in its design.  For example, a person who is "long" a stock would enter the number "1" in cell D5, or he would enter a "2" if he is short the stock.  If the user enters "2," then the program would add the ATR to the lowest high, low, or close reached by the stock since its purchase.

For example, if person wants to instruct the program to subtract the ATR from the highest high reached by the stock since its purchase, he can do so by entering the number "3" in cell B-5.  To subtract the ATR from the highest low reached by the stock since its purchase, he would enter "1" in B-5, and so on.  ("1" means low, "2" means close, and "3" means high).  Column "L" rows 10, 11, and 12 lists these options as a reminder to the user.

If the user does not want to see the red-letter alerts "Sell Alert!" and so on that appear in column H, he can enter the number "3" in cell D-5 to turn that function off.  The stop losses will still be generated but the red notices will not appear.

Column I shows the stop loss setting.  If a person is long, the stop loss will trail the stock up as the stock climbs.  If a computation is equal to or less than the previous calculation, the corresponding cell will be balnk.  New stop loss settings will appear only if they are higher than the previous stop loss setting.  This makes the output less confusing than if every computation were displayed.  The latest stop loss showing will be the highest stop loss since the first date of data.  The same thing is true for short positions, but in reverse.  That is, if you are short a position, the result of the latest calculation will show only if it is lower than the lowest stop loss before that calculation.

Sometimes a person will want to see the actual True Range calculations.  To do this, he would enter the number "1" in cell D-4 and the number "1" in cell F-5.  The entry "1" tells the program to display the True Range.  The number 1 is entered for the "Multiplier" so that the program will display the basic True Range.  If you want to see 1.5 times the True Range, you would enter 1.5 in cell D-4.  If you delete the entry in cell F-5, the data displayed in column "G" will vanish.

The computed stop losses will not follow the stock up and down.  If the stop loss has not risen for 5 days, the last stop loss showing will be the one computed 6 days ago.  That way, you don't have to search through all the computed stop losses to find the highest one.  It will be the last one showing.  Every time a higher stop loss is calculated, it will be displayed.  The old stop loss will still show, but the last one showing will always be the latest and highest.

ATR Stops employs thousands of equations to make calculations whenever data is changed, and many of these are dependent on the output of other equations.  All equations are recalculated even if a change modifies the output of only one equation.  Depending on the speed of your system, the recalculation could conceivabley take up to 2 minutes (possibly a little longer for some systems).  For most systems, a recalculation will not take nearly that long.  However, instead of making the user wait for calculations to finish every time data is entered or changed in a cell, ATR Stops will not recalculate until the user presses the f-9 key.  Then, all calculations will be completed at the same time.  To save time and to work more efficiently, we recommend that users make all entries and changes before pressing the f-9 key.  Some computers require the user to press the "fn" key while pressing the f-9 key.

ATR Stops will not function until the current date is entered in the yellow box of cell A-3.  Column L  rows 3, 5, 6. and 7 is where the user enters "Operational Codes" that Stock Disciplines will provide.  These codes access and control various funcions and computational modules within the program.  The program will not operate without them.  These codes are interdependent, so you could think of them as a single complex 60-digit code that controls various operations.  Modifying a single digit in any of them can cause subtle changes for certain combinations of settings or shut the program down entirely.  In other words, do not tamper with the codes we provide, because altering them in any way could make the program unreliable.  That is, corruptions can occur in output that are not obvious (stop losses generated could be quite wrong relative to the volatility of the security being tracked).  In the illustration, the bogus code "999-999-999-999-999" is entered in each code location simply for illustration purposes.  When a person enters his codes, he does not enter the dashes.  They are inserted by the program after the number has been entered.  The dashes appear after entry to make it easier for a person to compare the code with the original when checking for accuracy.  The numbers are given to the user with the dashes so it will be easier for the user to keep his place when entering them.  However, the dashes must not be included by the user when entering the codes because they are not really part of the codes.

The Lab

So you can get a “feel” for how various settings affect the stop loss, we have provided a "Lab" where you can experiment to find the settings that best suit you and your investment strategy.  We suggest that you spend a little time conducting experiments here before you use ATR Stops to track real positions.  Your tolerance for risk and your preferred investment time-horizon will have a big impact on the settings you use.  For example, if your goal is to capture most of a 1-month move, your stops will be much closer to the current stock price than if your goal is to capture most of a 6-month move.  The potentially much greater returns of shorter-term investing come at the cost of greater trading activity.  Longer-term investing will generally require less trading activity and allow more downside volatility (greater risk).  The trade-off in using this more “relaxed” approach is the high liklihood of a significantly smaller return.  We searched for stock charts to use in the "Lab" that have sufficient twists, turns, and trends to enable you to evaluate different combinations of settings.  The Lab begins on row 113 of the spreadsheet.  We have provided five charts in the lab and arranged them vertically.  You can see more than 5 years of charted price action by scrolling down.

In the "LAb," the stop loss follows the stock as it rises and falls.  The stop is traced in red.  From any theoretical “buy” point, you trace the progress of the red line relative to the price action of the stock.  The stop will be triggered whenever the stock’s low price falls below the highest price reached by the red line since the theoretical buy point.  To avoid having a position sold because of an intra-day spike, some investors use “mental stops.”  They wait to see if the closing price is below the stop line because they believe that where a stock closes is more important than what it does during the day.  In the lab you can study how your settings influence end-of-day stops by simply noting whether the stock’s closing price on the day of a decline is below the highest point reached by the red line.

You must be able to open and use an Excel 2007 spreadsheet with macros (.xlsm files) on your computer to be able to use ATR Stops.  To test your system, click on the following link.  It will take you to a page where you can download a small Excel spreadsheet with a macro (ATR Stops has a few macros).  If you can enter a number and cause the macro to work and the spreadsheet to recalculate and if your system can pass the macro test provided, then you should have no trouble using ATR Stops on your system.  Go to the test page

NOTICE:  At one time (up to May, 2013) we offered an ATR-based stop loss calculator, but it seemed redundant because of the availability of Stops and SD Stops. Stops includes a variation of the ATR approach, a standard deviation approach, and other approaches. SD Stops calculations are based on the standard deviation. Wilder's approach became very popular when it was introduced because it was much simpler to calculate the ATR than the standard deviation at a time when people did not have personal computers. However, statisticians prefer the standard deviation for computing volatility. Volatility estimates based on the standard deviation are more reliable than any computation based on averages, however those averages are calculated.  Furthermore, with our programs, it is not even necessary to know how to calculate the standard deviation. It is computed automatically for you based on the preferences you enter.  This page is not found by people browsing our site because we are no longer offering the ATR Stops calculator, so you must have found it through use of a search engine.  We wanted to keep the page in "storage" and available to search engines just in case there is enough demand for an ATR-based stop loss calculator for us to offer it again. If you really prefer the ATR approach, please let us know.

The Cost

The use of ATR Stops for a full year would cost less than the price of a subscription to the average stock market newsletter.  The average market letter consists of 8 to 12 pages of opinion.  On January 22, 2001, Money reported on a survey it made of 61 market letters.  The average annual subscription price for these newsletters was \$220.46.  We have not checked lately, but we are sure prices have gone up considerably since then.  ATR Stops also costs less than an adult ticket to Disneyland.  The price for using ATR Stops for 6 months is \$75 (support included).  Better stop loss placements can easily translate into far more in profits and savings than the price of using ATR Stops.  Even one well-placed stop loss might save many times the cost for a year of use.

Read the License Agreement for details before ordering.  To read the License Agreement, click on Agreement.   An order cannot be transmitted to us unless you acknowledge that you have read the License Agreement, and the only way an order will be accepted is if a person follows our required procedure.  The reason a different procedure is required for ordering ATR Stops than for ordering our other products is because ATR Stops is software that we e-mail to a person, while most of our other products consist of information that is available on this Web site by the use of a password.

If you wish to place an order, send us an e-mail to let us know.  We will give you instructions on how to proceed.  You may e-mail us from the "Contact Us" page.  Our e-mail address is also on that page in case you want to e-mail us using your own e-mail program.  If you do, use the phrase "Special Order" for the subject line so your message will not be deleted as spam.

Previously, we did not offer a trial period because we could not turn the tool off remotely once we sent it to a user. We believe we have solved that problem. We can now program the tool to automatically shut down if new codes are not entered after a trial period. See the License Agreement (above link) for details about the trial period.

Click on each of the following links to learn about the stop loss calculators we currently offer   SD Stops   Stops

Other Stop Loss Related Information On This Site

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Stock Disciplines, LLC