[briansmith456]

I like to use the ATR with a 52 week setting. So change the Parameters setting to 52 if you'd like to use that, but any amount is acceptable really as it depends on your trading timescale as to what you should use. So 52 weeks is just my preferred setting for investor positions, as it's the average weekly price range of the stock from the last year.

I use a maximum of 2 times the 52 week Average True Range (ATR) from the stop loss position to determine if a stock is too extended or not for me. But as I said other people use their own settings, as mine are quite strict. All I would say is to be consistent.

To calculate the ATR distance. Take the current ATR amount shown on the chart. So for example if it's 0.78, and the price is 31, and the stop loss position would be 29, then 31 minus 29 = 2, and 2 divided by 0.78 = 2.56. So it would be at 2.56 times the weekly ATR. Which would mean it's above my maximum tolerance of 2 times the weekly ATR.

Much appreciated your explanation of how to use ATR.