Chandelier Exit

The Chandelier Exit is a trailing stop-loss indicator developed by Charles Le Beau that uses the Average True Range (ATR) to set exit points based on market volatility. The name derives from the visual metaphor of a chandelier hanging from the ceiling — in this case, the stop "hangs" from the highest high of the position. For long positions, the Chandelier Exit is calculated as the highest high over a lookback period (typically 22 days) minus a multiple of the ATR (typically 3x the 22-day ATR). For short positions, it is the lowest low plus the ATR multiple. The elegance of the Chandelier Exit lies in its adaptability: during volatile markets, the stop widens (giving the position more room), while during quiet markets, it tightens (protecting more profit). This is superior to fixed-percentage stops, which don't account for a security's natural volatility. Traders commonly use a 3x ATR multiple, though this can be adjusted: aggressive traders might use 2x ATR (tighter stops, more frequent exits), while patient trend-followers might use 4x ATR (wider stops, longer holding periods). The indicator is particularly popular among trend-following and swing traders who want to ride extended moves while having a systematic, non-emotional exit strategy. When price closes below the Chandelier Exit (for longs), it signals that the trend may have reversed and it's time to exit.