A Nested ATR-Based Trailing Stop for Long Positions

Summary

The document shares a compact price-following stop formula built from recent highs, average true range, and a rolling low. It first offsets the highest high over a short lookback by one third of the 20-period ATR, then takes the lowest value of that adjusted series over a longer lookback. The resulting level is presented as a bullish trailing stop intended to follow price while allowing room for movement.

Despite the page heading referring to a bearish stop, the description explicitly calls the method bullish. The document provides no chart, market, timeframe, parameter rationale, backtest, or performance evidence, so its effectiveness is only asserted by the contributor. The formula’s behavior and suitability may depend on instrument, bar interval, and implementation details; it should be independently evaluated before use. The remaining text concerns site privacy and does not add trading guidance.

Key ideas

• The formula adjusts recent highs by a fraction of ATR before applying a rolling-low calculation.
• The author describes the stop as bullish, although the page heading says bearish.
• The method combines volatility scaling with lookback extrema to set a trailing level.
• No empirical testing or market-specific guidance is provided.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.