What is this indicator?  Click for explanation.

Click to view the chart.         

ATR Volatility based Stop Losses

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 date and 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 is topping out or undergoing consolidation).  Wilder developed a special way of computing the ATR.  This program calculates the Average True Range the same way J. Welles Wilder calculated it.  Not all programs use his method.  For example, some programs use the moving average calculations commonly used in charting programs, because they are simpler to implement than Wilder's formulas.  Again, this program implements Wilder's formulas in calculating the Average True Range.  Of course, users of ATR Stops do not have to know Wilder's formula or how to calculate ATR the way he did, because the program performs those calculations automatically.  All the user has to do is enter a "multiplier" like 1.5 or 2, and the numbers 1, 2, or 3 in various cells in order to tell the program what to do.


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. [NEVER 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.  Then, 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.  ATR Stops is configured so it can track up to 10 stocks simultaneously.    

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 (second column, fifth row).  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.

All computed stop losses are not shown as the stock rises or declines, unless the stop loss calculated is different from the previous one.  For example, 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 (or latest and lowest if calculations are for a short position) .  

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, but 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 for all stocks before pressing the f-9 key.  Some computers require the user to press the "fn" key while pressing the f-9 key.  

When you open ATR Stops, you will see something that resembles the following image.  Click on "Enable automatic refresh."  If you do not click on "enable," Stops will not work. 

         



When it opens, you will see something resembling the following image.  Note that each row of the spreadsheet is numbered and each column is identified with a letter.  Just above the letters that label the columns, there may be a message that says something similar to the one shown.  This message says, " Security Warning   Data connections have been disabled."  That is followed by a box labeled "Options."   If you see this, please click on Options and then enable.  

Note: NEVER delete or enter anything in any of the cells in rows 1 through 6 unless the cells are goldenrod in color.  Cells that are not white or goldenrod in color have hidden formulas that would be damaged if they were deleted or something is pasted over them and saved.  The functionality of those cells would be destroyed.  To be safe, assume that any cell that is not white or goldenrod in color has a hidden formula.   

          

This is the top left portion of ATR Stops.  ATR Stops will not function until you do four things. 
1. Enter the current date in the goldenrod colored box of cell A-3.  For example, if today's date is February 4th, just type 2/4 and press the "Enter" key.  The program will complete the entry. 
2. Enter the Four "Operational Codes" provided by StockDisciplines.com via email.  The codes are entered in Column L rows 3, 5, 6, and 7.  The codes will not function correctly until they are "turned on" in step 3.  These codes access and control various funcions and computational modules within the program.  The program will not operate without them.
3. Enable ATR Stops to import information from StockDisciplines.com.  To do this, click on the "Options" tab to the right of " Security Warning   Data connections have been disabled." and enable all items displayed (the "Options" tab is at the top of the above image).  This "warning" may not appear if you clicked on "Enable automatic refresh"  when the gray box appeared earlier that said "This workbook contains queries to external data that refresh automatically."
 
4. Press the f-9 key.  Instead of numbers in columns G and I, you will see "#VALUE!" until you press the f-9 key. Wait until the "#VALUE!" alerts disappear or convert to numbers.  The program will not function correctly unless you enter the current date and unless you enable the data connection.  The program will want to connect to StockDisciplines.com regularly whenever it is open to make sure it has updated information.


   ATR Stops     

The first image of the spreadsheet above shows ATR Stops with heading letters and row numbers for easy referencing in this description and the explanations provided on this page.  The actual appearance of the program is shown in the second image, the image immediately above this paragraph.  Strictly speaking, licensees use ATR Stops as an exe application rather than as the kind of xls spreadsheet (uaually associated with Excel).  However, watch for the same message that says, " Security Warning   Data connections have been disabled."  That is followed by a box labeled "Options."  The connections must still be enabled.  The yellow box in rthe above image is used for easy navigation.  The heading for each stock's data also has a link labeled "Top" that will take the person back to the top of the worksheet (the place illustrated above).  You will note that the column letter headings and row numbers are not there in the application.  They were removed becuse clicking on those headings would result in the selection of an entire column or row, and there is absolutely no reason to do that when making proper use of the program.  Without them, it is more difficult for a user to accidentally delete an entire column or row, and thereby destroy the functionality of the program.  

The four "Operational 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 first image above, 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 must 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 entered 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 1076 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.   The charts in the lab were pre-selected by StockDisciplines.com and cannot be changed.

You must have Excel 2003 (or later) installed on your computer, and be able to open an Excel spreadsheet with macros in order to use Stops. To test your system, click on one of the following links. It will enable you to download a small Excel spreadsheet with a macro (Stops has a few macros).  If you can enter a number and cause the macro to work and the spreadsheet to recalculate, then you should have no trouble using Stops on your system (unless you have a Linux or Apple system, and those may or may not work depending on configuration).  Test for Excel 2003 .   If you have Excel 2007 or later, take the following test Test for Excel 2007 & Later   If your system failed the test, you may get some help by going to    Macro Help  .

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.  A simple cost of living adjustment through November of 2016 would increase the price to $303.87. ATR Stops also costs less than a 1-day adult ticket to Disneyland (currently, a regular adult ticket for one day costs $105).  The price of a 6-month license for using ATR Stops is $85, but there is a discount for a 1-year license.  Both the 6-month and 1-year licenses renew automatically until canceled.  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

NOTICE: ATR STOPS IS NOT AVAILABLE AT THIS TIME.  WE HAVE TAKEN IT OFF THE MARKET TO PERFORM SOME MODIFICATIONS.  WE DO NOT EXPECT IT TO BE AVAILABLE BEFORE THE END OF THIS YEAR (2017).  HOWEVER, IT IS POSSIBLE THAT WE WILL COMPLETE MODIFICATIONS BEFORE THEN.  IF WE DO, THIS NOTICE WILL BE REMOVED AND THE PROGRAM WILL BE LISTED ON OUR "PRODUCTS & PRICES" PAGE (THIRD TAB ON THE LEFT OF YOUR SCREEN)


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.

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, cancellations, and refunds.

Click on the following link to learn about our other stop loss calculator Stops

Other Stop Loss Related Information On This Site

Stop Loss "Psych-Outs" Stop Losses and the 4-week Rule
Stop Losses and Probabilities Stop Losses and Risk Control
Stop Loss Relation to Diversification Stop Loss Long-Term
Stop Losses Getting Triggered Stop Losses and "Normal Fluctuation"
Stop Loss Information Stop Loss Tool


Links To Other Places On This Website 

Home   Market Review   RC Allen Alerts   Price/Volume Surges   Stock Scanner   Momentum   Strongest ETFs   Breakouts   Strongest Stocks   Stop Losses   Stops   Tutorials 1   Tutorials 2   Products   The Valuator   StockAlerts   Refund Policy   Index/Directory  
     . 

All pages on this website are protected by copyright
Copyright © 2008 - 2016 by StockDisciplines.com
No part of this publication may be reproduced or distributed in any form by any means.
-
StockDisciplines.com
1590 Adams Avenue #4400
Costa Mesa, CA 92628 USA.
 .

Trading and/or investing in the securities markets involves risk of loss. This website NEVER recommends that ANY individual buy or sell ANY securities.  It does not give individual investment advice, and nothing herein should be interpreted as if it does. Readers of this site's content should seek advice from a licensed professional regarding their personal investments. StockDisciplines.com will not be responsible for any loss that results from using information provided on this website.

IMPORTANT NOTICE
By using this site, you agree to our Terms of Use and Privacy Policy.  See them by clicking on their links near bottom of menu on left side of every page.