Designed to keep traders in trends while protecting profits
| Strategy Type | Volatility-Based Trailing Stop System |
| Market Outlook | Designed to keep traders in trends while protecting profits |
| Risk Profile | Volatility-adjusted stops; adapts to market conditions |
| Reward Profile | Captures major trend moves with intelligent exits |
| Time Horizon | Swing to position trading (days to months) |
| Best Conditions | Trending markets where capturing extended moves is priority |
| Indicator Basis | ATR-based trailing stop that hangs from recent high/low |
| Primary Instruments | XIU, XIC (index ETFs); Major banks (RY, TD, BMO); ZSP (S&P 500) |
| Trading Hours | 9:30 AM - 4:00 PM ET |
| Settlement | T+1 for stocks and ETFs |
| Tax Treatment | Capital gains 50% inclusion rate |
| Tfsa Eligibility | YES - Stock/ETF trading permitted |
| Rrsp Eligibility | YES - Stock/ETF trading permitted |
| Commission Consideration | Lower frequency exits; commission impact minimal |
| Currency Note | Consider CAD/USD exposure for US-listed instruments |
| Liquidity Note | Works well with liquid Canadian securities |
Because the stop level 'hangs' from the highest high like a chandelier hangs from a ceiling. The 'chain length' (ATR × multiplier) determines how far it hangs down.
Chandelier Exit is primarily designed for exits. While some traders use price crossing back above chandelier as an entry, this isn't its intended purpose. Use a separate entry system.
Start with the standard settings: 22-day lookback period and 3× ATR multiplier. These work well for most swing and position trading. Adjust based on your results.
Yes, Chandelier Exit works perfectly for TFSA trading. Its longer holding periods and trend-following nature are well-suited for registered accounts.
The chandelier only trails upward (for longs) because its job is to protect profits. If it moved down, you'd be giving back gains. It only goes up or stays flat.
Most traders exit on a close below the chandelier (not intraday touch) to avoid whipsaws. Some wait for confirmation the next day. Choose based on your risk tolerance.
Use Chandelier as your exit mechanism; other indicators for entry. Common combinations: MA crossover for entry + Chandelier exit, or breakout entry + Chandelier exit.
Shorter lookback (10-14) is more responsive for swing trading. Longer lookback (22-50) captures major trends. Match to your trading timeframe.
When ATR increases (more volatility), chandelier gives more room. When ATR decreases, chandelier tightens. This is a feature - the stop adapts to conditions.
Standard settings work for most liquid stocks, but highly volatile stocks may need higher multiplier (4×) and very calm stocks might work with lower (2.5×).
Track ATR percentile over 100 days. Use 2.5× when ATR below 30th percentile, 3.0× for 30th-70th, and 3.5× above 70th. This adapts to volatility regime automatically.
Track: MAE (Maximum Adverse Excursion), MFE (Maximum Favorable Excursion), Exit Efficiency (Actual Exit / Best Exit), and average holding period. These reveal if settings are optimal.
Scan for: price far above chandelier (opportunity has room), price approaching chandelier (potential exits), chandelier rising (new highs being made). Rank by chandelier spread.
Yes, create a portfolio heat map showing all positions' proximity to their chandeliers. This visualizes aggregate risk and helps prioritize which positions to watch or reduce.
Chandelier systems typically have 40-50% win rates because they let trades run and accept many small losses. Profitability comes from large winners exceeding small losers (positive expectancy via R-multiples).
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