ATR Dynamic Profit Target and Stop Loss Strategy

This strategy uses dynamic profit targets and stop losses that adjust based on current price and volatility. The logic is: 1. Calculate Average True Range (ATR) over a period (e.g. 20 days) 2. In uptrend, profit…

Author

ChaoZhang

Complexity

Starter · 41 lines

Parameters

Backtest bar

1d · swing

Tested on

BTC/USDT · futures

Strategy Logic

This strategy uses dynamic profit targets and stop losses that adjust based on current price and volatility.

The logic is:

Calculate Average True Range (ATR) over a period (e.g. 20 days)
In uptrend, profit target/stop is highest price minus ATR multiple
In downtrend, profit target/stop is lowest price plus ATR multiple
Reverse trade when price exceeds profit target/stop
Trend changes when price breaches profit target/stop
Adjust profit target/stop based on new trend state

The strategy leverages ATR to automatically set dynamic trailing profit targets and stops. This allows timely locking in of profits and preventing excessive losses.

Advantages

ATR automatically calculates profit/stop levels
Dynamic adjustment trails price in real-time
Timely profit taking and stopping controls risk

Risks

ATR parameters require optimization
Stops too close risks being stopped out
Need to monitor real-time ATR changes

Summary

This strategy uses ATR to dynamically set profit/stop levels for automatic trailing. ATR tuning can improve stop performance. But over-tight stops require caution.

Name	Default	What it controls
v_input_1	20	length
v_input_2	true	mult

Name

Default

What it controls

v_input_1

length

v_input_2

true

mult

/*backtest start: 2023-01-01 00:00:00 end: 2023-09-13 00:00:00 period: 1d basePeriod: 1h exchanges: [{"eid":"Futures_Binance","currency":"BTC_USDT"}] */ //@version=2 strategy("Dhananjay Volatility stop strategy v1.0", overlay=true) length = input(20) mult = input(1) atr_ = atr(length) max1 = max(nz(max_[1]), close) min1 = min(nz(min_[1]), close) is_uptrend_prev = nz(is_uptrend[1], true) stop = is_uptrend_prev ? max1 - mult * atr_ : min1 + mult * atr_ vstop_prev = nz(vstop[1]) vstop1 = is_uptrend_prev ? max(vstop_prev, stop) : min(vstop_prev, stop) is_uptrend = close - vstop1 >= 0 is_trend_changed = is_uptrend != is_uptrend_prev max_ = is_trend_changed ? close : max1 min_ = is_trend_changed ? close : min1 vstop = is_trend_changed ? is_uptrend ? max_ - mult * atr_ : min_ + mult * atr_ : vstop1 plot(vstop, color = is_uptrend ? green : red, style=line, linewidth=2) bearish = close < vstop bullish = close > vstop if (bullish) strategy.entry("Buy", strategy.long, 1) if (bearish) strategy.entry("Sell", strategy.short, 1)

ATR Dynamic Profit Target and Stop Loss Strategy

Strategy Logic

Advantages

Risks

Summary

Parameters

Source Pine Script

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