Chandelier Exit: ATR Trailing Stop on Gold

What it shows

Two lines on the price chart. The blue Long exit usually sits below price while it trends up, and the orange Short exit sits above price in a downtrend. Both are drawn all the time: Pravex does not hide the one you are not using and does not mark flips with arrows.

How Pravex works it out

1. For every candle, find the true range: the largest of high minus low, the distance from the high to the previous close, and the distance from the low to the previous close.
2. ATR is the Wilder-smoothed average of the true range over its own length (22 by default), the same smoothing RSI uses.
3. Find the highest high and the lowest low of the last Length candles (22), the current candle included.
4. Long exit = highest high - multiplier x ATR. Short exit = lowest low + multiplier x ATR. The multiplier is 3 by default.
5. Each candle gets both values fresh. There is no ratchet, so a line can move away from price as well as toward it.

Settings

Setting	Default	What changing it does
Length	22	How many candles the highest high and lowest low look back over. A longer length anchors the exit to an older extreme; a shorter one pulls it in and lets it follow the recent swing.
Volatility averaging length	22	How many candles the average true range is smoothed over. A short length makes the exit jump with each big candle; a long one reacts slowly.
Distance in ATRs	3	How many ATRs the exit sits from the extreme. A bigger number gives a wider stop that is hit less often but risks more per trade; 0 would put the line right on the extreme.

How traders read it

Traders in an uptrend use the long exit as a trailing stop: they keep it under price and treat a close below it as the sign the move is over. In a downtrend they use the short exit the same way, mirrored.

Try made-up figures: the highest high of the last 22 candles is 100, ATR is 4 and the multiplier is 3. The long exit sits at 100 - 12 = 88. If a bigger candle lifts ATR to 6, the same highest high now puts it at 100 - 18 = 82.

When it misleads

No multiplier suits every market, and the lines say nothing about direction. In a sideways range price crosses both lines again and again. The line also loosens when volatility jumps: a big candle lifts ATR and the long exit drops, so the stop moves away just as the market is moving most. Because Pravex does not lock the line to move one way, it can fall while you hold; if you want a one-way stop, you have to track the highest value yourself. On gold, the reopen after a weekend or the daily break can put a gap into the true range and widen ATR for a while.

Questions and answers

What are the best Chandelier Exit settings?

There is no best pair. The defaults are 22 candles and a multiplier of 3. A smaller multiplier gives a tighter exit, a bigger one gives price more room. Try both on gold’s own history on the timeframe you trade.

How far from price does the long exit sit?

From the highest high, not from the close: the gap to the close is how far the close is below that high, plus the multiplier times ATR.

Is Chandelier Exit an entry signal?

No. It is built as an exit or stop gauge, and Pravex draws no arrows. It tells you where a volatility-sized stop would sit, not when to get in.

Why does the long exit sometimes move down?

Because Pravex recalculates it on every candle: if ATR grows or the highest high drops out of the look-back window, the line falls. It is not a one-way trailing stop.

Related: Bollinger Bars, Historical Volatility, Average Daily Range, Auto Trendlines, every indicator.