How do you trade the same pair differently on different days?
EUR/USD on a quiet Tuesday and EUR/USD on Fed day are two different instruments. The pair is constant; the calendar, the volatility and the crowd are not.
What's your day-adaptive process?
- how the calendar reshapes your plan for a pair
- the size and stop adjustments you make
- the pair-day combination you've learned to avoid
Background: Average true range (ATR): measuring volatility and setting stops
ATR shows how far a pair typically moves in a period. Here is how true range is calculated, and how traders use ATR to place stops and size positions.
How is ATR calculated?
True range for each period is the largest of high minus low, high minus the previous close, and low minus the previous close, ignoring signs. ATR averages true range, typically over 14 periods with Wilder's smoothing.
What ATR multiple should I use for a stop-loss?
Many traders use 1.5 to 2 times ATR, but there is no correct number. Wider stops are hit less often and need a smaller position to keep the same amount of money at risk.
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