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ATR Chandelier Trailhang the stop from the highest point so far

Evidence: ModerateIntermediateExit · Volatility trail

The stop hangs a fixed number of average true ranges below the highest high the trade has reached — so it rises as the trade works and never falls. The distance adapts to the market's own volatility rather than to a round number of pips.

It is the natural partner to a trend entry, and it is the exit that makes the tail of a trend system possible: there is no target to cap the move, only a floor that follows it up.

This page is an exit method, not a trade. Attach it to any entry in the library and test the pair together — an exit tested against one entry tells you almost nothing about how it behaves with another.

Applies to
Trend and breakout entries — anything whose return lives in a few large trades
Timeframe
H1 and above · on D1 it is the standard trend-following exit
Best suited to
Instruments that trend cleanly, and systems with a low hit rate and large winners
Worst suited to
Range and reversion entries, which it exits far too late
Tools
ATR(N) and the running maximum of the trade's own highs

Valid setup

EX-02 · ATR CHANDELIER TRAIL — THE SAME TRADE, EXIT TWO EURUSD · H1 · the stop hangs 2.5 × ATR below the highest high so far and never moves down LONG 1.0791 1.0827 1.0864 1.0901 1.0938 1.0974 1.1011 kept — no target capped it the trail — 2.5 × ATR(14) under the running high ENTRY EXIT = first close below the trail 1 4 2 3 1.0842 1.0861 ① Trail starts at the entry bar, not later ② It rises with each new high and never falls back ③ Where EX-01 was already out, this is still in ④ Price turns — the trail does not move down ⑤ First close below it ends the trade ⑥ The giveback from the high is the cost of the tail

Exact rules

When it applies

  • Use it when the entry has no natural destination — a channel break, a moving-average cross, a momentum signal.
  • Set the multiple by the horizon: around 2.5 to 3 × ATR for daily trend trades, 1.5 to 2 × ATR intraday.
  • Start trailing from the entry bar, not after some amount of profit. A trail that switches on halfway through is two rules pretending to be one.
  • The stop only ever moves in your favour. If the ATR expands, the trail stays where it was rather than widening.

If it goes wrong

  • The initial stop is the chandelier level computed at the entry bar, so the exit rule and the initial risk are the same rule. That is a feature: one number to test.
  • Re-compute at each bar close from the highest high so far and the current ATR, then take the higher of that and the existing stop.
  • Expect to give back a meaningful share of the open profit on every trade. That giveback is the price of the tail.

The exit rule

  • There is no target. The trail is the exit.
  • Do not add a fixed target 'for safety'. A chandelier trail with a 2R cap is a fixed-target strategy with extra complexity, and it loses the trades the method exists for.
  • Test the multiple on your own entries. Too tight and you are stopped in normal noise; too wide and the giveback eats the trend.

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Trading carries risk and most retail accounts lose money. Nothing on this page is financial advice or a recommendation to trade. The chart is an illustration of the rules on constructed candles — it is not a record of a trade and not a backtest.