[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]  Steve Jacobs [@SteveDJacobs](/creator/twitter/SteveDJacobs) on x 3556 followers Created: 2025-06-20 10:55:59 UTC "ATR Matrix" - Explained This post is designed to explain how to use/read the "ATR Matrix". It is intended to be understood by all levels of traders so I will try to explain this clearly and as simply as possible. Summary The ATR Matrix is a representation of a stocks price relative to to its 50-Day Simple Moving Average (SMA50). This is a concept/approach that is taught and used extensively by the ever excellent @jfsrevg and @RealSimpleAriel . These are the two Legends I learnt this from so all credit to them. 🙌 What is Average True Range (ATR)? ATR simply stated measures volatility of a stock i.e. how much the price of a stock typically (on average) is expected to move, in either direction, in a specific period (in this case day). It is typically expressed as either a percentage or dollar amount for example, $PLTR ATR is $XXXX meaning, on average PLTR is expected to move +/- $XXXX per day. The current price $139.96, giving it a ATR% of 4.51%. Average Daily Range (ADR) can be used instead of ATR with the main difference being ADR does not take into account overnight gaps, averaging only the high–low range. I use "Wilder 14-Day ATR" directly from Finviz where available otherwise I calculate it using Python. You can probably find it in your scanners, chart software or other websites. The higher the ATR, the faster (more volatile) the stock moves. Traders who want to compound their money quickly will focus on stocks with high and above average ATR's (currently 3%+). The legendary @Qullamaggie in his streams has said "High ADR is Gold, low ADR is 💩". For my Qullamaggie inspired scanner, I set the threshold as "above average ATR" but from his streams I think he preferred ADR of 5%+ to "move the needle". Caution should be exercised with very high ATR's though. If the stock has an ATR of 10%, it is not uncommon for stocks to move 2x or more the ATR at least some days throughout the year and the movement is in any direction so that could be a -XX% to +20% move, with greater risks if held over multiple days. One approach would be to take your maximum permitted loss and divide that by XXX or X to determine the maximum ATR%. For example, if using 1.5x you set your stop-loss at -9%, this would mean the maximum ATR% for a stock would be 9/1.5 = 6%. You don't want to trade the slowest stocks so using the "above average ATR" to the"ATR Max" means you are focusing on stocks between X% and X% ATR. Entry Tactics (0-4x ATR) New positions can be initiated when the price is between 0-to-4x ATR from the SMA50. Stocks below the SMA50 are ignored. I would recommend strongly looking for stocks where Price >= MA20 >= MA50 >= MA100 >= MA200 and the price of the stock is above rising EMA10/SMA20 and SMA50. The tactics for entry could be "Darvas Breakout" upwards, Power Earning Gappers (PEG), an uncut-and-rally (U&R), Minervini VCP or whatever you choose to enter. I recommend watching the excellent @TraderLion_ entry tactics video below if you don't have a preferred entry method. The entry method should suit your personality and trading style. Stop-Loss (-1.5 to -X ATR from Cost) Once a position has been initiated, the stop-loss should be no more than "1.5x to 2x ATR from Cost" and no more than 1/3 your average gain. If you average gain is XX% on winners, losers should be capped at -X% (21/3) assuming a 50-50 win-rate*. This should also feed directly back into the "Max ATR %" threshold discussed earlier since you should not trade stock above XXX% ATR (recall we were setting the Max ATR% at 1.5x). This should also be taken into account with your win-rate (how many trades have positive outcomes vs how many have negative outcomes). Active traders with more experience may look to enter on a Opening Range Break (ORB) and building a cushion during the day, setting the stop-loss at Low of Day (LoD) but this lies beyond the scope of this post. The key point, regardless of how you implement the stop-loss, is to ensure the stop-loss is predefined prior to entering the trade and the reward-to-risk is asymmetric (ideally 3R reward or greater to 1R risk) taking into account your trading stats (win-rate, average gain, average loss). You may decide "I will use -1.5x ATR has my stop from cost and will target 4.5x ATR or greater profit". Winning Trades (5-7x ATR) Once you are in a winning position, it is important not to choke off the trade. "Cut losers short and let winners run" as many market wizards state (such as Paul Tudor Jones). Provided your stop has not been triggered and the stock is less than 7x ATR from the SMA50, stay in the trade. If the stock closes below the MA10 or MA20 then the position can be reduced or closed as Qullamaggie mentions on his streams. Winning Traders (7x ATR and Above) Once a stock is 7X ATR from the SMA50, the stock is becoming extended and more prone pulling back or going sideways and letting the moving averages catch up. This is the time to lock in some gains and it is personal preference has to how much. Personally I like to sell XX% of the quantity at each integer from 7x to 11x ATR so I am fully out at 11x ATR. For example, if I have XXX shares, I sell XX at 7x, XX at 8x, XX at 9x, XX at 10x and the final XX shares at 11x. @RealSimpleAriel I believe prefers to sell XX% of the remainder at each integer at/above 7x (20% of XXX then XX% of XX then XX% of XX etc.) giving himself the opportunity to capitalize on potential parabolic moves. The key is to start scaling out as the stock becomes 7x or more extended from the SMA50. The more extended, the more you should reduce the position. Example $RBLX Using $RBLX as an example, the trade is initiated on the 24th April 2025 when it breaks the pivot from the 2nd April and crosses $XX. ATR% is XXXX% and SMA50 is $XXXXX with the stock XXXX ATR's from the SMA50 (within the 0-4x ATR entry range). Stop loss set at 1.5x ATR from cost would be $XXXXX which would be -XXX% 14th May, the stock closes at 7.51x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 15th May, the stock closes at 8.16x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 27th May, the stock closes at 9.18x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 2nd June, the stock closes at 10.9x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 4th June, the stock closes at XXXXXX ATR at a price of $XXXXX. The final XX% of the position is sold. The average selling price is $XXXXX giving a return of XX% in XX calendar days, giving a reward-to-risk ratio of 6-to-1. P.S. Link to Jeff & @DumbleDax excellent ATR-to-SMA50 indicator  XXXXXXX engagements  **Related Topics** [$ar](/topic/$ar) [$nvts](/topic/$nvts) [$ske](/topic/$ske) [$mvst](/topic/$mvst) [$forty](/topic/$forty) [$car](/topic/$car) [$rdwr](/topic/$rdwr) [$vrna](/topic/$vrna) [Post Link](https://x.com/SteveDJacobs/status/1936015163624206660)
[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]
Steve Jacobs @SteveDJacobs on x 3556 followers
Created: 2025-06-20 10:55:59 UTC
"ATR Matrix" - Explained
This post is designed to explain how to use/read the "ATR Matrix". It is intended to be understood by all levels of traders so I will try to explain this clearly and as simply as possible.
Summary The ATR Matrix is a representation of a stocks price relative to to its 50-Day Simple Moving Average (SMA50). This is a concept/approach that is taught and used extensively by the ever excellent @jfsrevg and @RealSimpleAriel . These are the two Legends I learnt this from so all credit to them. 🙌
What is Average True Range (ATR)? ATR simply stated measures volatility of a stock i.e. how much the price of a stock typically (on average) is expected to move, in either direction, in a specific period (in this case day). It is typically expressed as either a percentage or dollar amount for example, $PLTR ATR is $XXXX meaning, on average PLTR is expected to move +/- $XXXX per day. The current price $139.96, giving it a ATR% of 4.51%. Average Daily Range (ADR) can be used instead of ATR with the main difference being ADR does not take into account overnight gaps, averaging only the high–low range. I use "Wilder 14-Day ATR" directly from Finviz where available otherwise I calculate it using Python. You can probably find it in your scanners, chart software or other websites.
The higher the ATR, the faster (more volatile) the stock moves. Traders who want to compound their money quickly will focus on stocks with high and above average ATR's (currently 3%+). The legendary @Qullamaggie in his streams has said "High ADR is Gold, low ADR is 💩". For my Qullamaggie inspired scanner, I set the threshold as "above average ATR" but from his streams I think he preferred ADR of 5%+ to "move the needle".
Caution should be exercised with very high ATR's though. If the stock has an ATR of 10%, it is not uncommon for stocks to move 2x or more the ATR at least some days throughout the year and the movement is in any direction so that could be a -XX% to +20% move, with greater risks if held over multiple days. One approach would be to take your maximum permitted loss and divide that by XXX or X to determine the maximum ATR%. For example, if using 1.5x you set your stop-loss at -9%, this would mean the maximum ATR% for a stock would be 9/1.5 = 6%. You don't want to trade the slowest stocks so using the "above average ATR" to the"ATR Max" means you are focusing on stocks between X% and X% ATR.
Entry Tactics (0-4x ATR) New positions can be initiated when the price is between 0-to-4x ATR from the SMA50. Stocks below the SMA50 are ignored. I would recommend strongly looking for stocks where Price >= MA20 >= MA50 >= MA100 >= MA200 and the price of the stock is above rising EMA10/SMA20 and SMA50. The tactics for entry could be "Darvas Breakout" upwards, Power Earning Gappers (PEG), an uncut-and-rally (U&R), Minervini VCP or whatever you choose to enter. I recommend watching the excellent @TraderLion_ entry tactics video below if you don't have a preferred entry method. The entry method should suit your personality and trading style.
Stop-Loss (-1.5 to -X ATR from Cost) Once a position has been initiated, the stop-loss should be no more than "1.5x to 2x ATR from Cost" and no more than 1/3 your average gain. If you average gain is XX% on winners, losers should be capped at -X% (21/3) assuming a 50-50 win-rate*. This should also feed directly back into the "Max ATR %" threshold discussed earlier since you should not trade stock above XXX% ATR (recall we were setting the Max ATR% at 1.5x). This should also be taken into account with your win-rate (how many trades have positive outcomes vs how many have negative outcomes). Active traders with more experience may look to enter on a Opening Range Break (ORB) and building a cushion during the day, setting the stop-loss at Low of Day (LoD) but this lies beyond the scope of this post. The key point, regardless of how you implement the stop-loss, is to ensure the stop-loss is predefined prior to entering the trade and the reward-to-risk is asymmetric (ideally 3R reward or greater to 1R risk) taking into account your trading stats (win-rate, average gain, average loss). You may decide "I will use -1.5x ATR has my stop from cost and will target 4.5x ATR or greater profit".
Winning Trades (5-7x ATR) Once you are in a winning position, it is important not to choke off the trade. "Cut losers short and let winners run" as many market wizards state (such as Paul Tudor Jones). Provided your stop has not been triggered and the stock is less than 7x ATR from the SMA50, stay in the trade. If the stock closes below the MA10 or MA20 then the position can be reduced or closed as Qullamaggie mentions on his streams.
Winning Traders (7x ATR and Above) Once a stock is 7X ATR from the SMA50, the stock is becoming extended and more prone pulling back or going sideways and letting the moving averages catch up. This is the time to lock in some gains and it is personal preference has to how much. Personally I like to sell XX% of the quantity at each integer from 7x to 11x ATR so I am fully out at 11x ATR. For example, if I have XXX shares, I sell XX at 7x, XX at 8x, XX at 9x, XX at 10x and the final XX shares at 11x. @RealSimpleAriel I believe prefers to sell XX% of the remainder at each integer at/above 7x (20% of XXX then XX% of XX then XX% of XX etc.) giving himself the opportunity to capitalize on potential parabolic moves. The key is to start scaling out as the stock becomes 7x or more extended from the SMA50. The more extended, the more you should reduce the position.
Example $RBLX Using $RBLX as an example, the trade is initiated on the 24th April 2025 when it breaks the pivot from the 2nd April and crosses $XX. ATR% is XXXX% and SMA50 is $XXXXX with the stock XXXX ATR's from the SMA50 (within the 0-4x ATR entry range). Stop loss set at 1.5x ATR from cost would be $XXXXX which would be -XXX%
14th May, the stock closes at 7.51x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 15th May, the stock closes at 8.16x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 27th May, the stock closes at 9.18x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 2nd June, the stock closes at 10.9x ATR at a price of $XXXXX. XX% of the position is sold, leaving XX% 4th June, the stock closes at XXXXXX ATR at a price of $XXXXX. The final XX% of the position is sold.
The average selling price is $XXXXX giving a return of XX% in XX calendar days, giving a reward-to-risk ratio of 6-to-1.
P.S. Link to Jeff & @DumbleDax excellent ATR-to-SMA50 indicator
XXXXXXX engagements
