- In an upward trend, the long trailing stop line (orange line under buy) appears and advances upward until the close crosses under the line.
- In a downward trend, the short trailing stop line (magenta over sell) appears and declines until the close crosses over the line.
The ATR Exit is one of 12 indicator-based trailing stops comprising our Universal Trailing Stop EA. You don't need to download this indicator to make it work in the UTS EA, as the indicator is already built into it, but if you want to see the how your trailing stops auto-adjust to the indicator lines on the chart of UTS-EA when you set Apply indicator template=true, you need to download this indicator.
While we use the ATR Exit as a trailing stop, it can be used in a volatility breakout strategy. The trader or EA can buy whenever the close crosses above the upper trail line and sell whenever the close crosses below the lower trail line.
This ATR exit trail is superior to using a fixed percentage because its change is based on the volatility characteristics of the underlying instrument and time frame. As Investopedia makes clear, "as the trading range expands or contracts, the distance between the stop and the closing price automatically adjusts and moves to an appropriate level, balancing the trader's desire to protect profits with the necessity of allowing the [instrument] to move within its normal range." (r)
- AtrPer (14) – Indicator Period;
- Factor (3) – This is the factor for multiplying the ATR. You may use fractions – this does not need to be an integer;
- Shift (1) - Indicator shift;