Same account. Same dollar risk. Two different stocks, and the position sizes shouldn't match.
Not when one of them swings twice as much on an average day.
That's the argument for sizing off ATR instead of a flat share count. Average True Range measures how much an instrument typically moves. Tie your stop to a multiple of it, and a wilder name earns a smaller position automatically. A quiet one can carry more. Same dollar risk either way.
This card lays out the formula in plain English, works one example by hand, and gives you a reference table showing how the math shifts as the multiplier changes.
It doesn't calculate anything live.
Your charting platform already does that. Continuously. With real numbers, not printed ones.
What's here is smaller. The formula, spelled out clearly enough to run yourself. A blank worksheet for whatever numbers you actually use on a real trade.
Reference only. Not a signal. Not a recommendation for any stop, multiplier, or trade.
A Trading Habits Tool
The ATR Position Sizing Reference Card
A quick-reference lookup for tying position size to volatility instead of a flat share count.
- Format PDF, 6 pages, print or read on screen
- Covers The ATR position-sizing formula, a worked example, and a multiplier reference table
- Includes A blank ATR Sizing Worksheet for your own trades
- Delivery Instant download right after checkout
Formula and structure only. Not a signal generator.
What's Inside
What's Inside The ATR Position Sizing Reference Card
- 01The standard ATR-based position sizing formula, explained in plain English with no jargon left undefined.
- 02What each term in the formula actually means, including dollar risk, ATR, and stop-distance multiplier.
- 03One fully worked, clearly labeled illustrative example showing the math end to end.
- 04A reference table of common stop-distance multiples, worked through the same illustrative numbers so you can see how the math shifts.
- 05Every example number is explicitly labeled illustrative, not a live quote for any real security.
- 06A blank "My ATR Sizing Worksheet" for recording the account risk, ATR, multiplier, and size you actually used.
- 07A short "How To Use This Card" page up front, explaining what it does and doesn't do.
- 08One printable card. No login, no app, no subscription.
HABITS
★
Certificate of Guarantee
60-Day, No-Questions-Asked
If The ATR Position Sizing Reference Card doesn't earn a spot in your files, email us any time within 60 days of purchase for a full refund. No form to fill out. No reason required.
Instant Download
$6One-time payment. No subscription.
Order Now6-PAGE PDF · DELIVERED IMMEDIATELY AFTER CHECKOUT · 60-DAY GUARANTEE
Behind The Tool
Where The ATR Multiplier Convention Comes From
The Concept
Average True Range doesn't care what a stock "should" do. It measures how far price has actually traveled, bar to bar, accounting for gaps. A name that gaps and trends fifty cents a day earns a very different stop distance than one that grinds in a two-cent range, and ATR is the number that tells the difference automatically instead of assuming every stock behaves the same way.
Sizing off a multiple of that number, instead of a flat percentage or a flat share count, is what keeps a stop from sitting so close that normal noise triggers it, or so far that one loss undoes weeks of gains.
Where It Comes From
J. Welles Wilder introduced True Range and Average True Range in his 1978 book New Concepts in Technical Trading Systems, the same book that gave traders the RSI and the parabolic SAR. Wilder built True Range to solve a gap problem: a simple high-minus-low range understates volatility on any day a stock gaps from the prior close, so he defined it as the greatest of three values, current high minus low, high minus prior close, and low minus prior close, then smoothed that number into a moving average.
The 2x, 3x, and other stop-distance multipliers traders use today were popularized later, including work associated with the Turtle Traders' "N"-based position sizing in the 1980s, but the underlying ATR calculation is still exactly Wilder's original formula.
Same Dollar Risk, Different Position Size
Illustrative example, not a live quote: both positions size off the same $200 account risk and the same 2×ATR stop multiplier. The stock with three times the daily range gets roughly a third of the share count. Same dollar risk, different position size, because the stop moved with it.
Try It: Live ATR Stop & Size
Stop distance is ATR times the multiplier, not a fixed cent or percentage amount, so the stop widens on a volatile day and tightens on a quiet one automatically. Share count is dollar risk divided by that stop distance, same as the printed card walks through by hand.
Background only. The card itself works the formula end to end and gives you a blank worksheet for your own numbers.
Common Questions
Who invented Average True Range?
J. Welles Wilder, in his 1978 book New Concepts in Technical Trading Systems, the same book that introduced the RSI and the parabolic SAR.
Why not just use the high-minus-low range instead of True Range?
A simple high-minus-low range understates volatility on any day a stock gaps from the prior close. Wilder defined True Range as the greatest of three values, current high minus low, high minus prior close, and low minus prior close, specifically to fix that gap problem.
Where did the common 2x and 3x ATR stop multipliers come from?
They were popularized later, including work associated with the Turtle Traders' "N"-based position sizing in the 1980s. The underlying ATR calculation itself is still exactly Wilder's original 1978 formula.