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I
Agree that Raw ATR numbers are of little use.
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<SPAN
class=706564004-31032003>Jayson, I presume you mean 'of little use' in relation
to defining efficient stocks. However, ATR can be very useful in establishing
positionsize. For example, many traders use a multiple of ATR to establish not
only a max stoploss point but also to help calculate how big of an
investment to make in a trade. Thus, risking 1% of current equity in a trade,
you can decide to take a position using the formula: PositionSize = -1 *
BuyPrice/(2*ATR(15)). Here, raw ATR is very useful because if you happen to buy
during a highly volatile time, your position size is lower because the 2*ATR is
in the denominator. Conversely, if the volatility is low at the time of the buy,
your position size is higher. This is a very effective position sizing strategy.
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Al V.
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