What This Feature is About
This feature provides dynamically calculated stop loss levels to help traders manage risk effectively. It uses the ATR (Average True Range) indicator to set two stop loss levels:
- Low Risk Stop Loss: For minimal risk tolerance, closer to the current price.
- High Risk Stop Loss: Allows for greater market fluctuations, farther from the current price.
These levels are calculated automatically for each trade signal and displayed as:
- The stop loss price.
- The percentage difference from the current price in brackets (e.g., 99 (1%)).
Background: What is ATR?
The Average True Range (ATR) is a widely used technical indicator that measures market volatility.
- It calculates the average price range of a token over a specified number of periods (default: 14).
- A higher ATR indicates higher volatility, while a lower ATR reflects a more stable market.
By incorporating ATR, the stop loss levels adapt to the token’s volatility, providing realistic and dynamic levels to manage risk effectively.
How We Calculate the Stop Loss Levels
- Determine the ATR:
- ATR is the moving average of the True Range (TR):
TR = \max(\text{High} - \text{Low}, |\text{High} - \text{Previous Close}|, |\text{Low} - \text{Previous Close}|)- This accounts for the largest price movement during each period.
- Calculate the Stop Loss Levels:
For Bullish (Long) trades:
- Low Risk Stop Loss: Latest Price - (1 × ATR)
- High Risk Stop Loss: Latest Price - (2 × ATR)
For Bearish (Short) trades:
- Low Risk Stop Loss: Latest Price + (1 × ATR)
- High Risk Stop Loss: Latest Price + (2 × ATR)
How to Use This Feature
- Access the Stop Loss Levels:
- Stop loss levels are included in the signal message for each token.
- They are displayed under the “⛔️ Stop Loss” section.
- Interpret the Information:
- Low Risk Stop Loss: Use this if you prefer tighter risk control.
- High Risk Stop Loss: Use this for a more flexible approach, allowing for larger price movements.
- Integrate with Your Strategy:
- Use the stop loss levels as a guideline to set your own stops on trading platforms.
- Combine them with other indicators for a more comprehensive strategy.
Disclaimer
These stop loss levels are automatically calculated based on market data and volatility. They are intended to support your trading decisions but should not be solely relied upon. Always consider other factors, such as market conditions and your personal risk tolerance, when setting stop loss levels.