You called the trend right. You got long, price pushed in your favour, and then a single ugly pullback shook you out near the lows of the move. Minutes later it turned and ran for another two hundred pips without you. The idea was never wrong. Your exit was, because it had no way to tell a normal breather apart from a real reversal.
That is the exact gap the chandelier exit was built to close. By the end of this guide you’ll know how to trail a stop that follows the trend’s high water mark instead of your entry, so ordinary noise stops costing you the back half of your best trades.
Key Findings
- It trails from the extreme, not your entry: the stop hangs a set ATR distance below the highest high of an uptrend, so it rides the move rather than staying pinned where you got in.
- It ratchets one direction only: as new highs print the stop steps up, then holds flat through pullbacks and never loosens, locking in progress without you touching it.
- The distance breathes with volatility: because it is measured in ATR, the stop sits wide in a fast market and tight in a quiet one, so the same pullback doesn't clip you in both.
- Clean settled levels don't repaint: a closed candle's stop is fixed; only the live candle's line keeps moving, which is trailing, not revision.
What is the chandelier exit indicator?
The chandelier exit is a trailing stop that hangs a fixed distance below the highest point a trend has reached, with that distance measured in Average True Range. Picture a chandelier bolted to the ceiling. The ceiling is the trend’s highest high, and the stop dangles a set drop beneath it. When the ceiling rises, the whole fixture rises with it.
It was developed by American trader Charles Le Beau and later put in front of a wide audience by Alexander Elder, who walks through it in his 2002 book Come Into My Trading Room; the calculation is documented in the StockCharts ChartSchool reference that many desks still use today. The design answers one specific frustration: a stop tied to your entry stops adapting the moment the trade moves, while a trend keeps making new highs that your risk line never acknowledges.
For a short trade the logic simply flips. The stop sits a set ATR distance above the lowest low of the down move, and it steps lower as fresh lows print. Same mechanism, mirror image.
How does the chandelier exit set its stop?
Start with the highest high since the trend began, then drop down from it by a multiple of ATR. That drop is your stop. As price prints a higher high, the highest-high reference moves up, so the stop moves up with it.
The part that makes it useful is what happens on the way down. The stop only ever ratchets in the direction of the trend. In an uptrend it climbs on new highs and then freezes during a pullback. It will not slide back down to chase price lower, so a dip that stays above the frozen line leaves you in the trade, while a dip that closes through it takes you out cleanly. You are never widening your risk after the fact, only tightening it as the trend earns it.
Because the cushion is priced in ATR, it self-adjusts to conditions. When a session heats up and candles stretch, the ATR grows and the stop hangs further from the high, so a violent-but-normal swing doesn’t reach it. When things go quiet, the cushion shrinks and the stop tucks in closer. You set the multiplier once and let the market size the gap.
Chandelier exit versus parabolic SAR versus a fixed trailing stop
All three trail a stop behind a trend. They differ in how tightly they follow and how much noise they forgive. The chandelier exit sits in the middle: looser than a SAR that races toward price, smarter than a fixed pip trail that ignores conditions entirely.
| Factor | Fixed-pip trailing stop | Parabolic SAR | Chandelier exit |
|---|---|---|---|
| Distance from price | Constant, ignores volatility | Accelerates in, tightens fast | ATR-based, adapts to conditions |
| Behaviour in a pullback | Clipped if the pullback exceeds the fixed gap | Often flips at the first stall | Holds its line, tends to survive the dip |
| Best trend type | Steady, low-noise moves | Sharp, fast reversals | Sustained trends with breathers |
| Main weakness | No context for changing markets | Whipsaws in choppy ranges | Gives back more near a top |
| Effort to run | Minimal | Minimal | One lookback, one multiplier |
The parabolic SAR protects more of a move but exits earlier, which is a fair trade when you expect V-shaped reversals. The chandelier exit forgives the shakeout in exchange for handing back a slice of the peak. Choosing between them is really a question about the market you actually trade, not which line looks cleaner on a screenshot.
RelicusRoad Pro
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Get RelicusRoad ProWhen does the chandelier exit get you out too early, or too late?
It struggles in a range. When price chops sideways with no real trend, the stop keeps flipping from one side of price to the other and hands you a string of small losses. This is a trend tool, and using it in a range is using a hammer on a screw.
The multiplier is where the honest trade-off lives. The conventional defaults are a 22-period lookback and a 3x ATR multiplier, roughly a month of daily bars with a generous cushion. Tighten the multiplier toward 2 and you lock profit sooner but get shaken out by ordinary pullbacks. Loosen it toward 4 and you ride further but give back more before the stop finally trips. There is no setting that both rides the whole trend and exits at the top, and any tool promising that is selling the back-test, not the live result. What the chandelier exit does well is remove the flinch: the line is set by rule, so you are not renegotiating your exit with yourself every time a red candle appears. For the volatility engine underneath it, the ATR indicator guide covers how that range figure is built.
Does the chandelier exit indicator repaint?
A correctly coded chandelier exit does not repaint its settled levels. Once a candle closes, the highest high and the ATR feeding that bar’s stop are locked, so the line drawn under a finished candle stays put.
The confusion comes from the live candle. Its stop line keeps adjusting as the current bar prints new highs, and that movement is the tool doing its job, not editing history. The failure to watch for is a stop level on an already-closed candle that shifts when you reload the chart. That means the calculation is peeking at data it shouldn’t, and a trailing stop that quietly redraws the past will flatter every screenshot and betray every account. It is the same trap laid out in the non-repaint forex indicator guide , and it is worth thirty seconds to check before you trust any exit tool with real money.
How does RelicusRoad Pro handle trailing exits?
RelicusRoad Pro treats the exit as part of the same structure that sets the entry, not a separate line you bolt on afterward. Its stop and level logic reads how far the market is actually moving, so the room a runner is given reflects current volatility rather than a fixed habit, and any level it commits is decided at the candle’s close and held there.
That last point is the whole discipline. A trailing exit is only trustworthy if the line it drew yesterday is still the line you see today. RelicusRoad Pro is built so a settled level does not quietly move under you, which is exactly what you need when your job in a winning trade is to sit on your hands and let a rule, not a nerve, decide when you’re out. It sharpens the exit; it does not pretend to tell you the trade was worth taking. That judgement stays yours.
Frequently asked questions
What is the chandelier exit indicator? It is a volatility-based trailing stop developed by Charles Le Beau. In an uptrend it plots a stop line a set number of ATR below the highest high reached since you entered; in a downtrend it plots one the same distance above the lowest low. Because the distance is measured in ATR rather than a fixed number of pips, the stop sits wider in fast markets and tighter in calm ones, and it follows the trend’s extreme instead of your entry price.
What are the default settings for the chandelier exit? The conventional defaults are a 22-period lookback and a multiplier of 3 times ATR. The 22 periods roughly match a month of trading days on a daily chart, and the 3x multiplier gives a trend generous room to breathe. A larger multiplier keeps you in longer but gives back more at the top; a smaller one locks profit faster but gets clipped by ordinary pullbacks. Most traders keep the lookback and adjust the multiplier to fit the market they trade.
Is the chandelier exit the same as the parabolic SAR? No. Both are trailing stops, but they tighten differently. The parabolic SAR accelerates toward price and can catch you at the first stall, which suits fast reversals. The chandelier exit holds a steadier ATR-based distance from the trend’s high, so it tends to stay with a trend through pullbacks that would already have flipped a SAR. Neither is better in the abstract; they trade off how much profit you protect against how much trend you ride.
Does the chandelier exit indicator repaint? A correctly built one does not repaint its settled levels. The stop for a closed candle is fixed once that candle finishes, because it is calculated from the highest high and the ATR of completed bars. The line on the current, still-forming candle will keep adjusting as new highs print, which is normal trailing behaviour, not repainting. If historical stop levels move after the fact, the tool is reaching into data it should not, and any back-test built on it is fiction.
Can I use the chandelier exit to enter trades? It is built as an exit, not an entry signal, and it works best in that role. Some traders treat a flip of the stop from below price to above as a rough trend-change cue, but on its own that lags and whipsaws in a range. Use it to manage a trade you entered for a separate reason, and let a trend filter or a level tell you when conditions actually favour being in the market.
The chandelier exit won’t tell you which trend to trade. It tells you how to hold the one you’re in without flinching, and hands you a hard line for the day the trend finally means it.
See how RelicusRoad Pro builds trailing exits into its levels and risk tools →