Chande Kroll Stop vs Chandelier Exit

Volatility Stop Chande Kroll for NT8

The Chande Kroll Stop was presented by Tushar Chande and Stanely Kroll in “The New Technical Trader”. It is a volatility based trailing stop and as most indicators in this category, it will help manage your profits by keeping positions open as long as they move in your favor. In this post we’ll compare the Chande Kroll Stop vs Chandelier Exit, to learn more, watch the video or continue reading below:

The Chande Kroll Stop Calculation

Two stop lines are used, green for long positions and red for shorts. You’ll close a long position once prices drop below the green line. Conversely, short exits occur when prices move above the red line.

First, the Average True Range of the last 10 bars is calculated by applying the arithmetic mean formula. For a long stop, the highest high of the last 10 bars is determined. A preliminary stop is then calculated by subtracting a 3 x ATR multiple from the highest high. For a short stop, the lowest of the last 10 bars is determined. A preliminary short stop is then calculated by adding a 3 x ATR multiple to the lowest low.

Chande Kroll Stop Calculation

The two preliminary stops have no resets, but continue, regardless of whether the market is in an up- or down-trend. In a second step, long stop and short stop are calculated from the preliminary stops:

  • The long stop is the lowest value of the last 20 preliminary long stops
  • The short stop is the highest value of the last 20 preliminary short stops

Trendbias: Paintbars vs. Fill Area

You may also use the Chande Kroll Stop to spot a trend bias. Green paintbars will plot once price has moved above the fill area between the stop lines. Furthermore, a blue fill area may confirm your paintbar trend readings. The green line will then move above the red line. Finally, a gold colored fill area will indicate a sideways moving market, with the red line moving above the green line.

Chande Kroll Bullish Scenario

Opposite, red paintbars will plot when price has moved below the fill area. If prices are moving at or within the fill area, you will see gray paintbars. Furthermore, a blue fill area will confirm a bearish trend when the green line moving above the red line. Again, the gold colored fill area will signal a sideways scenario when the red line moves above the green line.

Chande Kroll Bearish Scenario

Chande Kroll Stop vs Chandelier Exit

The Chande Kroll Stop can be considered a further development of the Chandelier Stop. Whereas the Chandelier Exit only comes with “stop and reverse” signals, either being long or short, the Chande Kroll adds further texture. Specifically, the fill area between the stop lines may be used to distinguish between trend and sideways scenarios.

Chandelier Stop for NT8

To compare Chande Kroll Stop vs Chandelier Exit, align the ATR settings for both indicators. For the Chandelier Stop, you’ll want to have the “Donchian Anchor” activated and the “Trailing Stop” feature disabled. A long stop is found by subtracting the ATR multiple from the highest high in the lookback period. The short stop is found by adding an ATR multiple to the lowest low. This is the same approach as used for the first step of the Chande Kroll calculation.

This can be seen by overlaying the Chande Kroll Stop. The ATR formula is then set to “Wilder”, aligning with the calculation used for the Chandelier Stop. Finally, by selecting a reference period of “1”, the second step of the Chande Kroll Stop calculation is eliminated, making it identical to the Chandelier Stop.

Conclusion

As seen above, the initial step of the Chande Kroll calculation is identical to the Chandelier Stop. By adding a second step, a reference period of the preliminary stops is used to arrive at the Chande Kroll plots. These stop levels are further removed from price than the Chandelier Stop. Accordingly, you may apply a smaller ATR multiplier and shorter lookback than for the Chandelier Stop.

You may consider using the Chande Kroll Stop for trade management together with Ichimoku trend and momentum setups. Our premium suite features the Ichimoku indicator and our NinjaTrader indicators library also has a basic Ichimoku version.

To download the Chande Kroll Stop indicator for NinjaTrader 8, please follow the below link:

Other Library Indicators

The Chande Kroll Stop is found in our Trailing Stops category along with other indicators designed to protect open profits, such as: The ATR Trailing Stop, Chandelier Stop, Deviation Stop, HiLo Activator, SuperTrend M11SuperTrend U11 and the Wilders Volatility Stop.