What ATR multiple should I use for a stop-loss?

Many traders place the stop between 1.5 and 3 times the ATR away from the entry price. Tighter multiples suit short trades and wider ones suit longer swings. It is a guideline, not a rule.

Does ATR show which direction a price will move?

No. ATR only measures how much a price typically moves, not whether it will rise or fall.

How do I work out how many shares to buy?

Divide the amount you are willing to risk by the risk per share, which is the distance from your entry to your stop. That is why risk, not conviction, sets the size.

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Technical analysis

ATR, stop-loss and position sizing: managing risk before returns

25 Oct 2026, 3:07 pm UTC

Why manage risk before returns?

Most investors focus on what to buy. Professionals focus on how much they can lose if they are wrong. A strategy that is right more often than not can still fail if a few losses are too large.

Two tools help: a stop-loss that is set sensibly, and a position size that makes that stop affordable.

What is ATR (Average True Range)?

Average True Range (ATR) measures how much a stock typically moves in a day, including gaps, averaged over a period (14 days is common). It is expressed in the stock's price units, not a direction.

ATR, stop-loss and position sizing: managing risk before returns

Why manage risk before returns?

What is ATR (Average True Range)?

How to set a stop-loss with ATR

How to size a position by risk

Position sizing example

Plan ATR stops in Eyrie

Frequently asked questions

Track your portfolio with Eyrie

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