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Logging stop distance in pips and in ATR side by side

Stop distance in pips tells you the size of the stop. Stop distance in ATR tells you how big it was relative to how much the market was moving at the time. Both are useful, and recording both in the journal makes a lot of later analysis possible.

A ten pip stop on a quiet Asian session might be two ATRs. The same ten pips during a London open after a big release might be half an ATR. The first is a wide stop for those conditions. The second is very tight.

When you only record pips, all ten pip stops look alike. When you add ATR, you can see whether your stops are consistent relative to volatility, or whether they swing from very tight to very loose depending on the session.

To record it, pick one ATR setting and stick with it. For example, 14 period ATR on M5. Note its value at entry, then divide your stop in pips by that value.

After a couple of months, look at the results by stop size in ATR. Many traders find that stops below a certain multiple of ATR get hit far more often, which suggests a minimum stop size relative to volatility, not a fixed number of pips.

Pips and ATR side by side is a good pair of columns. One choice to make is which ATR to log. A 14 period M5 ATR taken at 08:05 London is still mostly Asian bars, so a stop can look wide in ATR terms when it is perfectly normal for the open. Using an ATR for the same time window over the previous days, or simply waiting until a few London bars have printed before reading it, gives a fairer comparison between stops placed at different times of day.

ATR on different timeframes gives different numbers, and which one you use changes the reading. M1 ATR is small and jumpy. H1 ATR is larger and smoother. For a scalper, the timeframe you use to find entries is usually the right one for this, since that's the scale of movement the stop has to survive. If you enter on M5, use M5 ATR. If you enter on M1 but manage on M5, M5 is probably more meaningful. The important thing is consistency, so that every row in the journal is measured on the same scale and the comparisons later actually mean something.

Recording ATR also lets you look at target distances the same way. If targets are typically one ATR away and stops are half an ATR, the ratio is two to one in volatility terms, regardless of pips. That makes it easier to compare setups across pairs with very different pip movements, like EURUSD and GBPJPY. Without volatility adjustment, comparing pip stops and targets across those pairs isn't meaningful. A trade on each pair can be judged on the same footing once both are expressed relative to how much that pair was moving. It also helps when deciding whether a new pair suits your style, since its typical stop and target in ATR can be compared directly with the pairs you already trade.

The ATR value itself is informative over time, separately from the stop. A column of ATR values across all trades shows what kinds of conditions you tend to trade in. If most of your trades happen at below average ATR, you're trading quiet markets. If most are above average, you prefer active ones. Comparing your results in each condition can show whether you do better in one than the other. That might lead to a decision to only trade when ATR is above a certain level, which is a filter based on your own data rather than a general rule. Splitting the results into above and below average ATR is a reasonable first cut before trying anything finer.

Most platforms make it easy to read ATR at entry, but recording it by hand for every trade is tedious. A small script or EA that writes the ATR value into the trade comment, alongside the spread, saves the effort. If you journal in a spreadsheet, the ATR can also be filled in afterwards from historical data using the entry time, as long as you're using the same broker feed. That's slower but works for older trades, which means you don't have to start from zero and can include past months in the analysis. Using the same ATR setting for the historical fill as for live entries keeps the numbers comparable.

reckon the script route is the only way this actually gets done... i tried doing it by hand for about a fortnight and gave up, bloody tedious and id forget half of them. to be fair filling in the old trades afterwards from history is a good shout, just dont mix feeds or ATR settings or the numbers wont mean owt

Recording both is a great idea. The ATR column becomes even more useful when it is compared with the outcome. If most stopped-out trades had stops under one ATR, the stops were probably inside normal noise, and the issue is placement rather than the setup. One small detail: it helps to fix which ATR is used, for example the M5 ATR at the moment of entry, so the column means the same thing on every row and can be compared over months.

A spread going from 0.4 to 1.6 pips reads as one number. Underneath, it is two prices, and they rarely share the burden evenly.

When price is lurching upward, liquidity providers tend to pull their offers first, because those are the quotes about to be run over. The ask jumps away while the bid barely moves. In a drop, the bid is the side that disappears and the ask lags. So the widening often sits mostly on the side of the move, and the mid price drifts toward that side.

This matters for a very practical reason. A chart that plots only the bid line hides the ask completely. A short position closes with a buy at the ask, and a stop on a short is triggered by the ask, not the bid. An ask spike can therefore stop out a short while the bid chart shows nothing unusual, and the trader is left staring at a candle that never touched the stop level. The reverse applies to long stops during a bid collapse.

Two ways to check:

- Switch the chart to show the ask line as well, or use a chart set to ask prices, and compare the stop-out moment against both lines.

- Export tick data around a news release and measure, separately, how far the bid and the ask each moved relative to the mid before the event.

Skew can also be deliberate. Some brokers lean quotes toward one side when their book is crowded in one direction, which makes one side of the spread wider even in quiet conditions. Whether that happens depends on the broker and is hard to confirm from the outside, but a persistent asymmetry between the two sides of the spread across many hours is worth noticing.

The fill picture benefits as well. Slippage reports are usually written in pips against the requested price, but without knowing which side moved, the report only half explains the cost of the trade.

Has a stop ever been hit on a short or long while the bid chart showed price stopping well short of the level?