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.
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.
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.
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.
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.
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.
Ordering and The License Agreement
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.
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