Best Take Profit and Stop Loss Indicator on TradingView (ATR based)
- VasilyTrader
- 2 hours ago
- 3 min read
Today, I will show you the best take profit and stop loss indicator on TradingView.
It is completely free, and it can be used on any time frame and trading instrument.
I will explain how to set up and use this indicator.
ATR Problem
The most popular indicator that is applied for identifying stop loss and take profit is ATR Average True Range indicator.
One takes ATR values and measures a stop loss/take profit by multiplying ATR by a certain number.
And frankly, that is not convenient, especially for newbie traders.
TradingView offers an alternative, better option for stop loss and take profit placement.
Efficient Alternative
It is called ATR bands.
Open the indicator window on TradingView and search "ATR Bands".
Choose the one by the third floor.
How It Works?
Let's open this indicator's settings, and I'll explain what it does.
It is based on ATR indicator, and it measures market volatility.
ATR period in the settings will define the number of candles on a price chart for measuring volatility.
A default number is 3, meaning that it will measure an average volatility based on the last 3 candles.
ATR Band Scale Factor is used to multiply a current ATR value by a certain number.
Let me explain what it is.
Take a look at USDJPY chart.
ATR with 4 range shows that the current volatility is 12 pips.
With ATR Band Scale Factor being 2, the indicator will draw bands 24 pips or 2 ATR below and above the current price.
The upper band will be your stop loss if you sell.
The lower band will be your stop loss if you buy.
By the way, I also recommend changing the color of the upper band to red.
Best Settings for Stop Loss
Your safe stop loss will be at least 1 ATR Band Scale Factor, and I recommend setting ATR Period to at least 9.
Also, remember that an optimal stop loss strictly depends on your strategy. So you will need to do backtesting and find your own best settings.
Take Profit with ATR Bands
Now about take profit.
In the settings of the indicator, find take profit inputs.
Select "show opposite bands for take-profit zones''.
Take-Profit Scale Factor will define reward to risk ratio for your trades.
For example, if you trade with 2:1 reward to risk ratio and your profit is 2 times your risk, input 2.
In style, make Take Profit bands green.
Examples
Now let's discuss some examples.
Imagine you see a nice buying opportunity on NZDUSD forex pair.
Your stop loss will be based on a lower red band.
Your take profit will be the upper green band.
It will give you 2/1 reward / risk ratio.
If you want to sell USDCHF, your stop loss level will be based on the red upper band and your take profit will be the green lower band.
Trading Tips
And finally, let me give you a practical tips.
This indicator really distracts and overwhelms your chart.
While you are doing chart analysis, I recommend hiding this indicator.
Show that only when you identified a signal, and you are ready to open the trade.
When you are in a trade, you can also use this indicator for a trailing stop loss.
Just trail your stop loss following the ATR band.
This indicator will help find a safe, volatility-based stop loss and take profit on TradingView in a second.
Do not forget to do a proper backtesting for your strategy and good luck to you in trading.
