The ATR Trailing Stop indicator enables traders to determine the points of stop loss after calculating the volatility level with the help of the ATR indicator. This method was applied in the 80s by the legendary Turtle Traders. Since then it has been a modern and effective way of Forex trading.
Formula
StopLoss = Low[0] - 2 * ATR(5, Close[1]-2*ATR(5), and High[0] - 3*ATR(5)
Trading use
The ATR Trailing Stop indicator for Metatrader contains one line displayed at the price chart. This line shows the price levels of the break-even area where stop loss can be set to maximize the profit from your trading activity.
Usually, to set a stop loss, the professional traders use the volatility level based on the ATR indicator. So, when the price is rising or falling towards the target level, the technical indicator will draw uptrend or downtrend pointing to the price level, which is supposed to be chosen as a stop loss. This indicator is calculated by the standard coefficient of volatility, which is equal to 2.5 and optimal to the most financial markets ( i.e. the stop loss level is going to be at the distance of 2.5*ATR).
This indicator is an optional one and should be used in manual trading.
InstaForex ATR Trailing Stop indicator's parameters
ATRperiod = 5
