Indicators

ATR: Dynamic Stop-Loss & Entry Sizing

4 min read•Trading Reference Guide

What is ATR?

Average True Range (ATR) measures volatility - how much price moves (up/down) on average.

ATR Impact on Stop-Loss DistanceLow ATR (0.3%)ConsolidationTight SL1.5x ATR✓ Pros:• Higher win rate• Less whipsaw• Quick feedback✗ Cons:• Early stops• Small targetsMedium ATR (0.8%)TrendingMedium SL2.0x ATR✓ BALANCED• Good ratio• Room to move• Medium targetsEDISON uses 2.0xHigh ATR (1.5%)VolatileWide SL2.5x ATR✓ Pros:• Room for moves• Big targets✗ Cons:• Larger losses

Why ATR Matters

1. Dynamic Stop-Loss - More volatile markets need wider stops

2. Position Sizing - High volatility = smaller position, low volatility = larger position

3. Entry Timing - Low ATR = consolidation (possible breakout soon)

Session-Based ATR in EDISON

Asian Session: Lower volatility = 1.5x ATR (tighter stops)

European Session: Medium volatility = 2.0x ATR

US Session: High volatility = 2.5x ATR (wider stops)

ATR for Timing

When ATR drops = Consolidation forming (prepare for breakout)

When ATR spikes = Volatility expanding (trend/breakout happening)

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