What it is
Chuck LeBeau named the Chandelier Exit because the stop hangs down from the ceiling, the highest point of the recent move, like a chandelier. As new highs are made, the stop rises with them. Because the distance is measured in ATR, the stop sits further away in volatile markets and closer in calm ones.
WickSpeak draws two lines: a long stop below price and a short stop above. Whichever one price is respecting tells you which side the trend favours.
How it is calculated
1. Work out the average true range (ATR) over 22 candles. 2. Find the highest high and lowest low of the last 22 candles. 3. Long stop = highest high minus 3 times ATR. 4. Short stop = lowest low plus 3 times ATR. 5. The trend is treated as long while price closes above the long stop and flips short when it closes below it, and the reverse for shorts.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Length | 22 | 2 to 200 | Candles used for both the high or low and the ATR. 22 is about a month of daily trading days. |
| Multiplier | 3 | 0.5 to 10 | How many ATRs the stop hangs from the extreme. Lower keeps you closer and exits sooner; higher gives the trend more room. |
How to read it
How to trade it
- 1
Use it to manage trades, not to find them. Enter a gold uptrend on your usual signal on a 4 hour chart.
- 2
Set your stop at the Chandelier long stop, typically 25 to 40 points below price on 4 hour gold with the default settings.
- 3
Each time a candle closes, move your stop up to the new Chandelier level, never down.
- 4
Exit on the first close below the long stop. Do not set a fixed target; let the trend run.
- 5
On US30, a flip to the short side can also be used as a sell entry, with the short stop as your initial stop.
The trend the Chandelier Exit is following is proved over when a candle closes below the long stop (for longs) or above the short stop (for shorts).
WickSpeak runs in your browser with nothing to install. When you add the Chandelier Exit, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says which side price is on, how many points away the active stop sits, and whether it has just flipped.
In Playbook, our no-code strategy builder, the Chandelier Exit can be a condition in a play. It can test whether the Chandelier Exit: flips long; flips short; is bullish; is bearish. Each condition can run on any of 12 timeframes from 1 minute to weekly, combined with up to 11 others, and the play can be backtested on past candles with your own costs and turned into alerts on screen, by email or by phone push. Playbook's trailing stops can also follow an indicator line, ATR or a fixed number of points.
Best markets and timeframes
Built for trends on 1 hour to daily charts of gold, US30, NAS100 and major forex pairs. On short intraday charts the default 3 ATR is often too loose; try 2 to 2.5.
Common mistakes
- Using it as an entry signal in choppy markets, where it flips back and forth.
- Moving the stop down when the line drops, which defeats the point of a trailing stop.
- Using a multiplier so small that normal noise stops you out.
Works well with
Questions traders ask
What are the best Chandelier Exit settings?
22 and 3 is the standard, from Chuck LeBeau's original work on daily charts. For intraday trading many traders use a shorter length and a multiplier of 2 to 2.5.
Is Chandelier Exit the same as Supertrend?
Both are ATR-based trailing stops. The Chandelier Exit hangs from the highest high or lowest low over a period; Supertrend is built around the candle midpoint. They often give similar signals.
Can I use Chandelier Exit for entries?
Some traders enter when it flips sides, but it is designed as an exit. Flips are late in fast markets and frequent in ranges, so it works best with another entry method.
Why is it called the Chandelier Exit?
Because the stop hangs down from the highest point of the move, like a chandelier from a ceiling.