Stock Volatility Stop Calculator


Symbol:
Number of Days:
Multiplier:















This stock volatility stop calculator was created based on Thomas N. Bulkowski's book Getting Started in Chart Patterns (John Wiley & Sons, 2006).

Mr. Bulkowski also describes in detail how he calculates the volatility stop on his website: thepatternsite.com.

Don't place your stop closer than the Volatility Stop Price or you may be stopped out to early, and no further than the 8% Stop Price in order to preserve your capital.

Be sure to check the stock's chart as well and look for a recent price support line. Often you can place your stop below this line since, if it breaks support and is confirmed, the stock has a good chance of heading lower.

Basically what this calculator does is:

1. Get's the historical price data for your stock Symbol from Yahoo! for the Number of Days you specify. 30 days is the default value.

2. The difference between the day's High and Low are calculated in the Difference column.

3. The daily price differences are calculated as an average price difference. This number is the Average Difference.

4. The Average Difference is multiplied times the Multiplier you gave. The Multiplier is usually either 1.5 or 2 but Mr. Bulkowski recommends using 2 on his website. The result is referred to as the Volatility.

5. The Volatility is subtracted from the most recent stock price Low. The result is the Volatility Stop Price.

6. The Loss if Triggered percentage is calculated by subracting the Volatility Stop Price from the most recent Close and dividing the result by the most recent Close.

7. The 8% Stop Price is given because, as a general rule, you should never take more than an 8% loss on any trade. It's calculated by taking the most recent Close minus the most recent Close and multiplying the result times .08.


Thomas N. Bulkowski learned about this method from Perry Kaufman's book A Short Course in Technical Trading (John Wiley & Sons, 2003).

I thought about creating a spreadsheet to calculate these but decided to put it on the web in case there was anyone else looking for an easy way to calculate stock Volatility Stop Prices. Enjoy!

 

Disclaimer: This volatility stop calculator is provided free of charge and you assume all risk for any profit or loss in stocks you're invested in. By using this calculator you hold the author and owners of this website free and harmless from any and all liability.

┬ęCopyright 2010, Bert Moen. All Rights Reserved.