Chandelier Exit

Primarily for exits. Chandelier Exit is a trailing stop system designed to protect profits and define exit points. Use a separate entry system (breakout, MA cross, etc.) and Chandelier for exit management.

The standard setting is 22-period lookback with 3× ATR multiplier. The 22 periods represent roughly one trading month, and 3× ATR gives enough room for normal volatility.

No. Wait for the price to CLOSE below the Chandelier Exit. Intraday touches often recover. The close confirms sellers won the day, making it a more reliable exit signal.

No. For long positions, Chandelier Exit can only move UP (when new highs are made) or stay FLAT. It never moves down - that would defeat its purpose as a trailing stop to protect profits.

The Chandelier Exit automatically adapts. When ATR increases, the stop moves further from price, giving more room. This is a key advantage - it's self-adjusting to market conditions.

Start with 3× (standard). If stopped out too often, try 3.5× or 4×. If giving back too much profit, try 2.5×. Backtest different values on your stocks. Higher beta stocks may need higher multipliers.

Yes, though it's not ideal. Enter long when price crosses above the short Chandelier Exit (suggesting downtrend ending). However, dedicated entry systems usually provide better signals.

Plot both long and short Chandelier Exits. Price above both = bullish zone. Price below both = bearish zone. Price between = transition/uncertain. Useful for identifying trend strength.

Regular trailing stops use fixed percentages. Chandelier adapts to volatility using ATR. In volatile markets, Chandelier gives more room; in calm markets, it tightens. This reduces whipsaws.

Chandelier works best on stocks with sufficient liquidity and trend potential. Avoid on very thinly traded stocks or stocks with erratic price behavior. It's designed for swing/position trading.

Formula: Multiplier = Base × (Current ATR / Average ATR). When current ATR is higher than average, multiplier increases. When lower, multiplier decreases. This auto-adjusts to volatility regime.

Reduce the multiplier as the trade ages to lock in more profit. Example: Start at 3×, reduce to 2.75× after week 1, 2.5× after week 2. This progressively protects gains.

Yes. Calculate Chandelier on your portfolio equity curve. If equity closes below the Chandelier, reduce overall exposure. This acts as a drawdown management system at the portfolio level.

Count exit triggers per period. High frequency = choppy market where Chandelier whipsaws. Also monitor ADX: ADX < 20 suggests ranging market where Chandelier may underperform.

Options suffer time decay. Holding a losing position longer costs more due to theta. Tighter multiplier (2-2.5×) exits earlier, reducing time decay impact on losing trades.