# ATR stops

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ATR stops is a VertexFX client side VTL indicator that helps traders for placing stop-losses and exit levels.

When ATR stops is Green, then stop-losses can be placed for Buy positions below the ATR stops level. Likewise, when the ATR stops is Red, then stop-losses can be placed for SELL positions above the ATR stops values.

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ATR stops is a VertexFX client side VTL indicator that helps traders for placing stop-losses and exit levels.

When ATR stops is Green, then stop-losses can be placed for Buy positions below the ATR stops level. Likewise, when the ATR stops is Red, then stop-losses can be placed for SELL positions above the ATR stops values.

The concept behind ATR stops indicator is that it is always at a distance from the reached price extrema. It has the following idea: small corrective movement against the main trend should be ignored, and the movement against the main trends that exceed a certain level (the size of the moving filter K) signalize about the reverse trend.

The ATR stops indicator is based on the AVERAGE TRUE RANGE indicator (ATR). The ATR indicator is a moving average of the true range for a set number of periods. So for a trailing stop one might use a multiple of the current ATR. If the ATR value is 10 points, a stop could be placed at 2 times the ATR which would be 20pts away from the current price. It’s a very simple concept and seems to be one of the most popular stop methods when it comes to using indicators.

Method of calculation of the indicator:
1. First, we calculate the value of the indicator ATR(i) with ATR period = 5.
2. After that, we make the calculation of the upper and lower channels of the following formulas:
– upper channel(i) = High[i] – Kv*ATR[i]
– lower channel(i) = Low[i] + Kv*ATR[i]
where Kv = 2,5
3. We find the Highest High of upper channel (smax) and Lowest Low of lower channel (smin) over the recent PERIOD bars.
4. We build upper channel if the following condition Close more than smax and build lower channel if Close less than smin.

Application of ATR Trailing Stop is simple enough: it is necessary to move the trailing stop on the indicator line. Those. you must manually move the stop-loss based on the indicator line, then the loss will be reduced, profits increase.

This indicator does not provide BUY and SELL signals. It is used to place stop-loss levels.