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How Pro Traders Harness ATR for Effective Time Frame and Target Setting In trading, precision in setting time frames and targets is crucial for success. One tool that professionals rely on to achieve this precision is the Average True Range (ATR). ATR measures market volatility by averaging the true range of price movements over a specified period, typically 14 days. For instance, if a stock has an ATR of $2, it suggests that the stock generally fluctuates $2 up or down each day. This information is invaluable for traders when determining appropriate stop-loss levels, profit targets, and the expected duration of a trade. By analyzing the ATR, traders can estimate how long it might take for a stock to reach a desired price level. For example, if you're targeting a $6 move on a stock with a daily ATR of $2, it could be reasonable to anticipate that the stock may achieve this movement over approximately three trading days, assuming consistent volatility. This approach helps in aligning trade expectations with market behavior, thereby enhancing decision-making. A Special Way to Trade the Santa Rally — LIVE AT 2:30 PM ET! Most folks think the Santa rally is over… But here's the thing, historically speaking, the average return during the Santa rally stands at 3% from the S&P 500. At 2:30 p.m. ET today, Dec. 30, I’m joining Lance Ippolito to show you how you can target much bigger returns of up to 10 or even 20 times more! Kane Shieh Kane Shieh Trading Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. |
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