Chandelier Exit

Chandelier Exit is a trend-following strategy that pairs a simple trend filter for entry with a volatility-based trailing stop for exit. It enters while the trend is up (the 50-day EMA above the 200-day EMA) and stays in until price closes below the Chandelier Exit line - a stop that hangs a fixed number of ATRs below the recent high (like a chandelier hanging from a ceiling) and ratchets upward as new highs form. The design philosophy is "let winners run": the stop only pulls the position out on a genuine, volatility-sized reversal, not on ordinary pullbacks.

It is an easy, trending, daily trend-trading strategy.

How it trades

Buy (trend is up):

EMA(50) > EMA(200)

Sell (trailing stop hit):

Close < CHANDELIEREXIT(22, 3)

CHANDELIEREXIT(period, multiplier) is the long-side Chandelier Exit: the highest high over the last period bars (current bar included), minus multiplier × ATR(period). With the standard 22/3 settings it sits three ATRs below the 22-bar peak, so it tightens in calm markets and gives more room in volatile ones. It ratchets up with new highs, keeping the stop trailing the trend.

When it works best

Best on names in sustained, directional trends, where the ATR-scaled trailing stop rides the move and only triggers on a real reversal. Its documented weakness is delayed exits: because the stop sits several ATRs below the high (and the trend filter must also turn), a fast reversal from a peak can give back a meaningful part of the gain before the exit fires. In choppy, range-bound markets the trend filter rarely lines up, so the strategy simply stays out.