Learn something new here [Grin] . I give my humble pie [LOL]
ATR
ATR , basically give you the average delta up or down price movement . Help you to set a target to take profit or cut loss.
Parameters
The parameters (1 -3) is your tolerance range. It gives you some idea when to cut loss or take profit. Set at 1 is probably no good bec you end up cut losses too often.
Set at 2 also mean you giving yourself roughly 2 days of leeway.
Pro /Cons
pro - simple . work better if the trend persist.
Con -
1. it doesnt tell you when is a good entry.
2. dont work for stocks that are volatile
3. skewed average for stocks that had recently big up or down over a period.
4. you should set the high at the resistance level instead
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