The ATR Stop, used mostly as a trailing stop loss and also known as a chandelier stop, is one of the most popular methods of trailing stop loss used by traders and investors. ATR stands for Average True Range, in other words it is the Average range (from high to low) of the last “x” amount of bars. Why is this useful?  Well, if we are using the average range of the last “x” amount of bars, and that average changes as the market moves on, then the ATR will change as well.  In other words – it is adjusting for volatility.  If we have large, wide daily ranges, we get a larger ATR value.  If we have small, neat daily ranges, we get a smaller ATR value. Using this as our trailing stop helps our stop loss adjust, too. Check out the video below,I hope you enjoy, and please leave a comment! The main part of our code is this: This sets up the ATR stop length we want to use, and then: You may need to actually type it in, to avoid formatting errors of cut and paste 🙂

You can see all the details and examples of ApplyStop at the Amibroker Knowledge base article. I hope this helps, happy trending and enjoy! Beginners Course  |  Intermediate Course  |  A Videos in the FREE Amibroker Course: FREE Amibroker Q & A Videos: And, subscribe for free to stay in touch and receive the latest updates: Enter Your Email Address: (Check Your Junk Mail, Just In Case)The requested URL /school/doku.php?id=chart_school:technical_indicators:chandelier_exit was not found on this server.The indicator known as average true range (ATR) can be used to develop a complete trading system or be used for entry or exit signals as part of a strategy. Professionals have used this volatility indicator for decades to improve their trading results. Find out how to use it and why you should give it a try.The average true range is a volatility indicator. Volatility measures the strength of the price action, and is often overlooked for clues on market direction.

A better known volatility indicator is Bollinger Bands®. In "Bollinger on Bollinger Bands®" (2002), John Bollinger writes that "high volatility begets low, and low volatility begets high." Figure 1, below, focuses solely on volatility, omitting price so that we can see that volatility follows a clear cycle.wallacavage chandelier for sale How close together the upper and lower Bollinger Bands® are at any given time illustrates the degree of volatility the price is experiencing. chandelier milano tripadvisorWe can see the lines start out fairly far apart on the left side of the graph and converge as they approach the middle of the chart. chandeliers obstacle pas cherAfter nearly touching each other, they separate again, showing a period of high volatility followed by a period of low volatility.

(For more, see Basics Of Bollinger Bands®.) Bollinger Bands® are well known and they can tell us a great deal about what is likely to happen in the future. Knowing that a stock is likely to experience increased volatility after moving within a narrow range makes that stock worth putting on a trading watch list. When the breakout occurs, the stock is likely to experience a sharp move. For example, when Hansen (Nasdaq:HANS) broke out of that low volatility range in the middle of the chart (shown above), it nearly doubled in price over the next four months. The ATR is another way of looking at volatility. In Figure 2, we see the same cyclical behavior in ATR (shown in the bottom section of the chart) as we saw with Bollinger Bands®. Periods of low volatility, defined by low values of the ATR, are followed by large price moves. Trading With ATRThe question traders face is how to profit from the volatility cycle. While the ATR doesn't tell us in which direction the breakout will occur, it can be added to the closing price and the trader can buy whenever the next day's price trades above that value.

This idea is shown in Figure 3. Trading signals occur relatively infrequently, but usually spot significant breakout points. The logic behind these signals is that whenever price closes more than an ATR above the most recent close, a change in volatility has occurred. Taking a long position is a bet that the stock will follow through in the upward direction. ATR Exit SignTraders may choose to exit these trades by generating signals based on subtracting the value of the ATR from the close. The same logic applies to this rule - whenever price closes more than one ATR below the most recent close, a significant change in the nature of the market has occurred. Closing a long position becomes a safe bet, because the stock is likely to enter a trading range or reverse direction at this point. (For related reading, see Retracement Or Reversal: Know The Difference.) The use of the ATR is most commonly used as an exit method that can be applied no matter how the entry decision is made.

One popular technique is known as the "chandelier exit" and was developed by Chuck LeBeau. The chandelier exit places a trailing stop under the highest high that the stock reached since you entered the trade. The distance between the highest high and the stop level is defined as some multiple times the ATR. For example, we can subtract three times the value of the ATR from the highest high since we entered the trade. (For related reading, see Trailing-Stop Techniques.) The value of this trailing stop is that it rapidly moves upward in response to the market action. LeBeau chose the chandelier name because "just as a chandelier hangs down from the ceiling of a room, the chandelier exit hangs down from the high point or the ceiling of our trade." The ATR AdvantageATRs are, in some ways, superior to using a fixed percentage because they change based on the characteristics of the stock being traded, recognizing the fact that volatility varies across issues and market conditions. As the trading range expands or contracts, the distance between the stop and the closing price automatically adjusts and moves to an appropriate level, balancing the trader's desire to protect profits with the necessity of allowing the stock to move within its normal range.

(For more, see A Logical Method Of Stop Placement.) ATR breakout systems can be used by strategies of any time frame. They are especially useful as day trading strategies. Using a 15-minute time frame, day traders add and subtract the ATR from the closing price of the first 15-minute bar. This provides entry points for the day, with stops being placed to close the trade with a loss if prices return to the close of that first bar of the day. Any time frame, such as five minutes or 10 minutes, can be used. This technique may use a 10-period ATR, for example, which includes data from the previous day. Another variation is to use a multiple of ATRs, which can vary from a fractional amount, such as one-half, to as many as three (beyond that there are too few trades to make the system profitable). In his 1990 book, "Day Trading with Short-Term Price Patterns and Opening Range Breakout", Toby Crabel demonstrated that this technique works on a variety of commodities and financial futures.