Posts: 1
Joined: 4/30/2020
Location: Bateau Bay, Australia
User Profile Hello.
Please excuse me if this stubject has been discussed before, I searched, but found nothing relevant.
Am I correct in assuming that when using a Simple Trailing Profit Stop, that the ATR value is set when the trade opens, and does not change while the trade is active?
The problem I have is that a trade entered in volatile times (for example 23 March 2020) sets a wide margin between price and the stop, but when volatility dies down (months around August 2020) the margin stays the same because, I assume, the value of ATR is remembered from the time that the trade opened.
I am finding that my stops are just too wide in this type of trade. I use a cushion of 1.5 x ATR which was measured in March, but using the August ATR for the same stock in the same trade the cushion has blown out to about 3 times ATR.
Maybe there is a more appropriate stop that takes into account changing volatility? I'm open to suggestions.
Thanks,
KH
(I am using end of day OT)