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How does using ATR to set stop loss help minimize risks in cryptocurrency investments?

avatarMochamad Akbar MaulanaDec 26, 2021 · 3 years ago1 answers

Can you explain how using Average True Range (ATR) to set stop loss helps minimize risks in cryptocurrency investments? How does ATR work and why is it effective in managing risk?

How does using ATR to set stop loss help minimize risks in cryptocurrency investments?

1 answers

  • avatarDec 26, 2021 · 3 years ago
    Using ATR to set stop loss is a widely used practice in the cryptocurrency trading community. It helps traders manage their risks by providing a systematic approach to setting stop loss levels. By using ATR, traders can set stop loss levels that are based on the volatility of the market, rather than arbitrary price levels. This allows them to adapt to changing market conditions and avoid getting stopped out prematurely. Additionally, ATR can help traders avoid setting stop loss levels that are too tight, which can result in frequent stop outs and missed profit opportunities. Overall, using ATR to set stop loss is a valuable tool for minimizing risks in cryptocurrency investments.