Chandelier Exits

JJJJ

I feel that Chandelier exits can be a useful reliable strategy when the market has its normal ups and downs over time. However, when we experience major selloffs as we have had recently, are the Chandelier exits really a valid, wise exit strategy ?

markd

The usefulness of any stop indicator will depend on how well its parameters match the market. The parameters are necessarily based on past behavior. But, as the market changes, the parameters can become less suitable, getting you out "too soon" or "too late".

You might want to consider whether your chart timeframe matches your trade time frame. If you are mid to longer term minded, you would probably place your stop indicator on a weekly chart, not a daily chart, or else use much wider parameters on your daily chart than the default values.

One thing I've noticed with default parameters on some stop indicators is, the exits are in fact ideal entries if the stock is trending well. If you are in for the longer term, you probably don't want to consider getting out until the stock makes a lower high from a lower low.

Keep in mind, the long term approach is not designed to make the last dollar. By the time it's evident the trend has changed and it's time to get out, you will get a price that you could have exited on several weeks or months ago and gone on to another opportunity, and you've given up maybe 10 or even 20 per cent off the best price. That's OK if you've been riding a long trend. But you have to choose well and early in the trend to make that sacrifice worthwhile.

The alternative is to trade shorter term. Keep your stop close at entry, assuming your timing is good, but then, don't move the stop up until price has made at least an average gain for one leg. Then, when you see weakness - slack volume, small range, small gains, long wicks and/or tails, or failure to make a new price on good volume, move your stop up tight - or - put your stop ABOVE the current price, so you catch the next move up, which, given recent weakness, is likely to be the last.

lmkwin

you may want to plot the "short" Chandelier on your charts also. Put a comma short after the parameter. This would give you an indication that a Short position could be opened... perhaps. It's just another piece of information that could help you in the trend identification process.

So 22,3.0 becomes 22,3.0,short

JJJJ

Thanks... Will look in to

lmkwin

Arthur Hill did a Strategy example a few years ago with Chandelier Exits.

https://stockcharts.com/articles/arthurhill/2019/05/weekly-market-review--outlook---weighing-the-evidence-and-the-nerve.html

And a video (shows using them for target and stop identification)
https://www.youtube.com/watch?v=7ZOAur8Rr2U

I didn't know you could offset the Keltner Channels

lmkwin

More things I didn't know.... or maybe knew but forgot.... You can offset Price Channels also using the same comma and period in the parameters. So a 20 period Price Channel can be offset to the left or the right by adding a comma and the offset. Example 20,10 or 20,-10

This works in both the Chart Overlays and the Indicators Overlay area.

lmkwin

In the category of more things I didn't know... or maybe knew but forgot.....
You can use the minus on a "ratio" in the Price Indicator to get a different view instead of the colon. Especially interesting of the two symbols use the same scale

For example, the Percent of stocks above their 200 day moving average. The scale runs from 0 to 100 on the symbols. Looking at the NDX and SPX on this example

Using a colon to separate the two (and using the histogram style) it looks like this:



Using the minus to separate the two it looks like this:



The periods of over and under performance become a little clearer between the two symbols.

I "remember" a lot of things watching Arthur Hill presentations.

lmkwin

Another undocumented feature and thing that I did not know you could offset.

Bollinger Bands. Default parameter is 20,2. You can add another comma and offset parameter. So 20,2,20 will offset the bands 20 periods into the future. 20,2,-20 will off set them 20 periods into the past.

Discovered this as part of a previously mentioned review/analysis/study I'm doing on converting PnF price targets to reflect on time charts.