Chandelier Exit Indicator

MT4 Market Levels TradingFree Download

The Chandelier Exit Indicator for MT4 is based on a very specific principle. Namely, the opproach aplied here tells to stay in a trade until a clear shift in trend is evident. This way forex traders stay away from premature exits, and at the same time, they maximize potential profits. What’s more, it also provides a protection for posssible market reversals.

How is the Chandelier Exit build?

In essence, the formula behind this trading tool includes volatility calculations based on the ATR (Average True Range). To be specifc, it uses a 22-day period ATR plus a customizable multiplier (with default value of 3.0). We can say that it provides a reliable trailing stop loss and good entry points upon crossover of the indicator readings and price.

Chandelier Exit Indicator Example Chart

As you can see, this is essentially a rough line that moves either below or above the candles. If you pay attention, you will notice how skilfully it adapts to price variations. The key here is the profit-protection feature. The entry signals are based on switch from pink to orange and vice versa.

During a downtrend, the stop loss line is positioned above the price. On the contrary, in an uptrend, it’s just placed below the price.

The formula

Some facts for those interested in technical details. Typically, the Chandelier Exit uses the following formula (default settings):

Uptrend:
Highest high (in the past 22 days) – 3x ATR (for 22 days)

Downtrend:
Lowest low (in the past 22 days) + 3x ATR (for 22 days)

Trading with this MT4 indicator

The creator, Chuck LeBau describes the approach in these words: “profits run in the direction of a trend while still offering some protection against any reversal in trend”.

The indicator provides explicit entry points for opening both long and short trades. What’s more it offers effective risk management, so traders can confidently adjust their stop losses. This is possible because of the dynamic stop-loss levels that adapt to ongoing market fluctuations.

Long trade signal checklist

Monitor chart until a candlestick closes above the signal line. It will be visualized in orange color.
Open a long position as soon as the following candlestick opens.
Considering the volatility of the pair, set your stop-loss order slightly below the Chandelier Exit level.
Progressively raise the stop-loss level in line with new price highs.
A trend reversal will automatically trigger a market exit. It will be visualized in pink color.

Chandelier Exit Indicator Buy Signal

Short trade signal checklist

Await a candlestick to close below the line, which should switch to pink color.
Enter a short position with the opening of the next candlestick.
Position your stop-loss order just above the Chandelier Exit.
Continually lower the stop-loss as the price reaches new lows.
Upon trend reversal, the market will activate the stop and you should close the position. Confirm with switch to orange color.

Chandelier Exit Indicator Sell Signal

Conclusion

This indicator gives one of the best progressive support and resistance levels. They automatically adapt to changes happening in the markets. A break of these levels can be considered as entry trigger. We rate this gauge as very solid one and it’s really worth exploring. Putting it together, it allows direction identification, riding the trend till exhastion and protecting profits.