SPDR S&P 500 (SPY)

[learningboutinv]

Lefty, I've been scouring the net with regards to ATR because stockcharts doesn't really explain it that well. May be you can help me understand it a little more. The ATR value = the period where the renko charts will automatically calculate the point size and fill in a brick based on that point size.

So, correct me if I am wrong with this assessment, but if the ATR on a daily chart is 14, it will take the high/lows of the past 14 days and get an average for the point size. Now if it is on the minute charts like 15/30min then it will use ticks and when lets say 15mins is up, a new brick will form if price violates the average points set via ATR. If no point violation whether up or down then no new brick is created.

If you have a daily chart set to a year, would it be advantageous to set that ATR to a period that is really big, say 140 instead of 14? That way the point size is an average of high/lows over 140 days versus 14 days? I notice for the $NDX when I set the ATR to say 3 on the daily my point size was greater (48.5) because of the big price movement in the past 3 days. But when I set it to 140, the point size was smaller at 37.45.

May be I'm assessing this all wrong, but it seems better to set the ATR higher on the daily or weekly so it gets a true price point average than the volatility of the past few days or the past week.

I guess I have to play with it a bit more. May be it is better to use pts. and calculate how many pts. I am comfortable with before a reversal.

Again, thanks for the help.