Wilder’s ATR-Based Stop-and-Reverse Indicator

Summary

This document describes a stop-and-reverse method that sets a price stop using Wilder’s Average True Range multiplied by a coefficient. The included implementation uses a period of 7 and a coefficient of 3, initializes the stop after the early bars, and updates its reference level using the highest or lowest closing prices since the last reversal. When price crosses the stop, the indicator flips sides; the accompanying rule says a trader can exit a long position on a downward cross and optionally take a short position.

The author reports having backtested the code and characterizes the income as small but consistent, but provides no market, sample period, costs, risk measures, or supporting results. The description does not establish that the method will work across instruments or regimes. Its behavior depends on implementation details and parameter choices, so the reported experience should be treated as an unsupported anecdote rather than evidence of general profitability.

Key ideas

• The stop distance is based on Average True Range multiplied by a coefficient.
• The indicator trails price using closing-price extremes since its last reversal.
• A cross below the stop exits a long position, while a cross above reverses the stop to the other side.
• The author reports limited backtest experience but provides no details sufficient to assess robustness or live performance.

Tags

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