[JONA]

Isatrader - I'm really enjoying your website content, thank you for all of the incredible write-ups and videos - it’s definitely helped me elevate my game as a position trader. 

I noticed that you use ATR on your charts (I see that you use 21 and 52 both?), how much emphasis do you give to it when evaluating a stock? Do you couple it specifically with some of the other indicators when you do research to assess if it's a good buy/sell? I’m learning more about it and was curious on your method and approach, thank you. 

Thank you JONA, I'm really glad that's been helping you.

With regards to the ATR. I use it in a number of different ways. As a guide to a stock's normal volatility when deciding where to place a stop-loss, as I generally think for position trading that it needs to be up to 2x the ATR to give it enough room from its normal movements. As well as a way to see if a stock is too extended from an entry point as if it is already 2x or greater from the breakout for example, then I'd generally want to wait for a pullback, as I want to get in just above the 1x ATR level if breaking out etc. And you can also use it for grading trades, by determining how far the stock moved compared to its 52-week ATR or any other ATR setting that you want as long as it's consistent. So for example for swing trading you might give a 1x ATR move a C grade, a 2x ATR move a B grade, and 3x ATR move an A grade etc.

There are no hard and fast rules of how you should use the ATR. But it can be a very useful tool.

I hope that helps

That makes sense, thank you!