ATR Trailing Stop Indicator Explained

The ATR Trailing Stop is the most widely used volatility exit in systematic trading: a line trailing N ATRs behind the best price since entry, ratcheting only in the trade's favor. Quiet trends keep it close; volatile ones give it room — automatically.

How It Works

• Stop = highest price since entry − multiplier × ATR (for longs).
• The line never retreats; it only tightens as price advances.
• A close (or touch) beyond the line ends the trade.

How to Trade It

Multipliers set personality: 2× exits nimbly, 3× rides big trends through pullbacks. Pair the stop's ATR with the entry timeframe's ATR for coherent risk, and size positions off the initial stop distance so every trade risks the same fraction of equity.

Building It in Setup.Cash

Add ATR Trailing Stop in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. See the stop-loss types guide and Chandelier Exit. For the full category overview, see the volatility & statistics library guide.

Volatility indicators qualify trades rather than generate them — backtest your system with and without this filter and compare the drawdowns.