Chandelier Exit

The Chandelier Exit is a trailing stop that hangs from the highest point of a trade, a set number of ATRs below it — like a chandelier from a ceiling. (ATR, the average true range, measures how much the bars move.) Charles LeBeau designed it and Alexander Elder described it in Come Into My Trading Room (2002); MillionChart draws the trailing form of a widely used community script (2017), with a mark where the direction turns.

What it shows#

• Long stop — the green line under the price while the indicator is long: the highest close of the last 22 bars minus 3 ATRs. It only rises.
• Short stop — the red line above the price while it is short: the lowest close plus 3 ATRs. It only falls.
• Only one line is drawn at a time; Buy and Sell labels mark where the direction turns (on by default).

How it is calculated#

The long stop is the highest close over ATR period bars minus ATR multiplier × ATR of that period; while the previous close held above the previous long stop, the new stop is never lower than the old one, so it ratchets up. The short stop mirrors it: the lowest close plus the same distance, never higher while the close holds below it. The direction turns long on a close above the previous short stop and short on a close below the previous long stop; otherwise it stays. With Use close for extremes off, the highest high and lowest low replace the highest and lowest close, which places the stops a little further out.

How traders use it#

• The classic use is the exit of a long: hold while the closes stay above the green line, leave on the first close below it. The line rises with new highs and never gives back ground.
• Three ATRs is a loose stop meant to survive normal pullbacks; 2 or 2.5 gives back less in a reversal but is hit more often.
• The direction changes double as entries in a trend-following system — with a trend filter, since every range produces both labels.
• Watch out: the stop can only rise, so after a sharp spike it sits far below the price until the ATR shrinks, and a fast reversal can give back much of the move before the exit comes.

Settings#

Example on gold#

For example, a trader buys gold at $4,250 after a Buy label; the green line starts about $120 below the highest close (three ATRs of $40). Gold runs to $4,400 over six weeks, and the line follows up to about $4,280 and stays there through a two-week pause, because it cannot fall. Then gold closes at $4,270, below the line: the Sell label appears and the trader leaves with the bulk of the move.

What invalidates the reading: a Buy and a Sell within a few bars of each other — the stop crossed back and forth in a range. Wait for the price to leave the range before trusting the next label.

Add it to your chart#

1. Click Indicators in the top strip (on the Pro screen, press I).
2. Type chandelier and click Chandelier Exit.
3. Click its chip in the legend (CE 22 3) to open the Inspector and change the settings; drag the chip to reorder; the dot hides it; × removes it.

Related#

• Average True Range (ATR) — the volatility measure the stop hangs by
• ATR Trailing Stop — a stop measured from the price, not from the trade's high
• Chande Kroll Stop — both stops drawn at once, from the highest high and lowest low
• SuperTrend — another ATR stop that flips side when crossed
• Alerts — an alert when the price crosses the stop, or on a Buy or Sell signal
• Adding and tuning indicators