

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! 