You can use ATR as a stop loss by placing it a multiple of ATR away from entry, typically 1.5x for day traders and 2x to 3x for swing traders. For long positions, place your stop below the entry point; for short positions, place it above.
Most swing traders find the sweet spot at 2x ATR, providing enough room to avoid routine fluctuations while still protecting capital; day traders often use 1.5x ATR or lower.
The advantage is adaptive risk: unlike fixed methods, ATR adjusts in real-time to market conditions.