📈 Volatility Continues

This quick tip will help.

Volatility Impacting Day Trading

Day trading has been difficult for the last few weeks. We have seen stocks all over the place, making wild swings intraday, making it difficult to day trade.

I have a quick tip that I often use that I wanted to point out to help everyone out.

Average True Range

Using the Average True Range (ATR) indicator can help you understand whether you have the right stop loss in place.

ATR tells you the amount of variability you can expect to see 67% of the time. So no it will not tell you the range with 100% certainty, but it is correct more often than not.

This can help you understand whether your stop loss is too tight and you are likely to get run over, or if your stop is appropriate.

Let’s take a look at TSLA for example:

You can see that at the open yesterday, the ATR was over $2 on a 5-minute bar. This means that you need to be prepared for at least that much variation on a 5-minute chart.

While the stock ended up trading in a range yesterday, this could have helped you get out of the way before the stock dropped $4 from the first 5-minute bar.

I walk through ATR and how I used it in a live trade here: