For trade entries, the percentage of the ATR is known as the EntryFactor, a

parameter common to all of the systems. The default EntryFactor is 0.25. For
example, if the ATR of a stock is 1.6 and the EntryFactor is 0.25, then a long
trade will be entered if the previous day's high is exceeded by 1.6 X 0.25 = 0.4,
and a short will be entered only if the previous day's low is exceeded by 0.4. The
Acme systems use the ATR as a standard for trade entry, trade exit, position sizing,
and for other range calculations (see Table 1.5).




SellStop = Lowest (Low, StopBars) - (ExitFactor X ATR) (1.4)
Similarly, the code for short exit stops is:
CoverStop = Highest (High, StopBars) + (ExitFactor X ATR) (1.5)
The Profit Targets are percentages of the ATR determined by ProfitFactor. The
Trade Manager defines two types of profit targets, a single-bar target and a
multi-bar target. The single-bar target looks for a wide-range move on any given
bar, and the multi-bar target looks for a wide-range move multiplied over a
range of bars. The EasyLanguage code for the single-bar profit target for a long
position follows:
SellTarget1 = High + (ProfitFactor X ATR) (1.6)
The single-bar profit target for a short position is:
CoverTarget1 = Low - (ProfitFactor X ATR) (1.7)
The default ProfitFactor is 0.9; the Trade Manager expects almost a full ATR
move in the trade's direction. When a sell target is reached using a limit order,
then half of the position is exited.
The multi-bar profit target is a double ProfitFactor move over half of the
holding period (the variable ProfitBars). For example, if the holding period is
five days, then the sell target is 2 X 0.9 = 180% of the ATR in three days. The
code for the multi-bar profit target for a long position follows:
SellTarget2 = High [ProfitBars] + (2 X ProfitFactor X ATR) (1.8)
The multi-bar profit target for a short position is:
CoverTarget2 = Low [ProfitBars] - (2 X ProfitFactor X ATR) (1.9)
The complete code for the Acme Trade Manager is shown in Example