Hi. I'm wondering if anyone here is familiar with and actually uses Chandelier Stops. I'm interested in them, but there are a few things I'm a bit confused about. I actually tried e-mailing Chuck LeBeau (the guy who came up with the idea) about it, but didn't get a response. So, I'm trying this instead. Thanks.
Chandelier Stop users?
- Thread starter JT30
- Start date
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Yes,JT & yes somewhat, on use of it.
I read /reread his 2004 article[GOOG] on it ,which i had read years before now;
its similiar to PSAR or PTP {parabolic time price indicator] which tightens up the stop , the longer one is in the trade.
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So requardless who discovered the idea first[ PSAR probably was invented first,by Wells Wilder, but i cant prove that];
great principle. I use PTP/PSAR with discretion;
mechanically it gives too many false/frequent signals to suit me.
Probably one of the best way to use PSAR/PTP is simply leave it on your daily, monthly charts for MANY years.Every now & then it helps. Wisdom is profitable to direct.
Is it [PTP]as helpful as ''the trend is a friend''?
No, no way, but i like it anyway.
The Chandelier Stop appears in Welles Wilder's 1978 book New Concepts in Technical Trading Systems on page 26; Wilder gave it a different name.
Chuck LeBeau renamed it "Chandelier" in approximately 1999 (link); certainly the word "Chandelier" and its concept + calculation are completely absent from LeBeau's 1992 book.
Wilder used an exponential moving average of True Range with a smoothing constant of 0.143 (corresponding to a "13 bar EMA"). Wilder recommended that the trailing stop (the thing LeBeau called "Chandelier") should be "hung" somewhere between 2.8 and 3.1 ATR's from the most favorable price.
Chuck LeBeau renamed it "Chandelier" in approximately 1999 (link); certainly the word "Chandelier" and its concept + calculation are completely absent from LeBeau's 1992 book.
Wilder used an exponential moving average of True Range with a smoothing constant of 0.143 (corresponding to a "13 bar EMA"). Wilder recommended that the trailing stop (the thing LeBeau called "Chandelier") should be "hung" somewhere between 2.8 and 3.1 ATR's from the most favorable price.
Okay, so there ARE some people out there who actually use this strategy. Good! Now, I'll tell you some of what confuses me about it.
So I know that for a long trade, the stop is supposed to be a certain number of ATR's from the highest high since the trade has been in place. But what about when you're first getting into a trade? Do you use today's high, or, if you're trading a pullback, for example, the high that was made before the pullback occurred? And if you use the high that was made before the pullback, do you use today's ATR value to calculate the stop, or the ATR that was in place at the day of that high?
Hope that makes sense. Thanks!
So I know that for a long trade, the stop is supposed to be a certain number of ATR's from the highest high since the trade has been in place. But what about when you're first getting into a trade? Do you use today's high, or, if you're trading a pullback, for example, the high that was made before the pullback occurred? And if you use the high that was made before the pullback, do you use today's ATR value to calculate the stop, or the ATR that was in place at the day of that high?
Hope that makes sense. Thanks!
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jT3;
Not long or short QQQ, which makes a 6 month 12 month chart with PSAR on it an excellant educational illustration.
QQQ has plenty of good uptrends on a 12 month chart;
PSAR still has a buy signal. If you wanted to get long QQQ, 1 or 2 day pulback may be ok, especially with PSAR buy signal .
How eversince $120 is al time high area of QQQ;
$ 60 is 50 % off sale. So if you wanted to go long ;
$53.53 area may work out. much better than mindlessly using a PSAR for long or short signals.
Good uptrends by definition make mostly higher highshigher lows ...;
downtrends mostly lower lows,lower highs so stops may be placed with those in mind. Not a prediction
You can use chandelier stops however it suits you. For longs I generally use the highest high since trade entry - chandelier stop, I adjust end of day, but you can choose another time frame if it suits you. You can use a different starting point to calculate the initial stop, but it makes more sense to use your entry point since all you really care about is whether you're making or losing money.
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Well, that's true with EVERYTHING in TA, isn't it?! But the question, to me, is what is the BEST way to use it. Theoretically, the best person to answer this question would be Chuck LeBeau himself, but I've already tried that and he ignores me.
But anyway, okay, so even at (what you hope is) the bottom of a pullback, you would let the chandelier exit "hang" from TODAY's high, and not the most recent price high (that is, the high before the pullback)? Or, by "your entry point," do you literally mean the price at which you enter the trade, and not the high of your entry bar?
Lastly, I'm just wondering -- do you use these types of techniques (basically meaning ATR-based techniques) to calculate profit targets as well? Thanks again.
Theoretically the best person to answer the question would be someone who has tested every single possible way to use the Chandelier Stop, compared those test results, and circled the one that was indeed best. Unfortunately there are an infinite number of ways to use the Chandelier Stop, so this will require an infinite number of tests, and an infinite number of 100 Terabyte hard drives to contain the results, and an infinite amount of time to sift thru them looking for The Best.
Thus it may be more practical to abandon your quest for The Best, and settle for Something Pretty Damn Good That You Can Discover In Less Than A Month Or Two. Invent some possibilities, try them out, and see which work best for you.
Here's what Chuck LeBeau is now selling as opposed to giving away for free in his Bulletins
http://goo.gl/haERV
http://goo.gl/76gNr
Maybe he will answer questions from customers more quickly than from non-customers?
what is the best, the very best, the best of the bests, the best of the bests of all time....
this kind of question is worse than looking for an imaginary needle in any haystack....
it is not much different from questions asked by affluent adults.... what is the best tasting ice cream....? dairy queen, 31 flavors, baskin, tom and jerry.... et cetera
there is no best exit strat.... there is only what is best for you which may or may not even be best or even appropriate for the next traders per se....
if labeau wants to sell his module as the best.... let all suckers flock to it.... and enjoy it....
however, the chap labeau does have some good ideas during his quest to have the best exit strat.... for sale....
from my limited experiences.... no profitable trader would ever sell his profitable setups, nor would any profitable trader would part with his/her entry or exit strat.... while they remain profitable....
would you sell to any jack and jill your golden egg laying hen while she is still productive....? thx everyone for listening to my 2 empty pennies input.
this kind of question is worse than looking for an imaginary needle in any haystack....
it is not much different from questions asked by affluent adults.... what is the best tasting ice cream....? dairy queen, 31 flavors, baskin, tom and jerry.... et cetera
there is no best exit strat.... there is only what is best for you which may or may not even be best or even appropriate for the next traders per se....
if labeau wants to sell his module as the best.... let all suckers flock to it.... and enjoy it....
however, the chap labeau does have some good ideas during his quest to have the best exit strat.... for sale....
from my limited experiences.... no profitable trader would ever sell his profitable setups, nor would any profitable trader would part with his/her entry or exit strat.... while they remain profitable....
would you sell to any jack and jill your golden egg laying hen while she is still productive....? thx everyone for listening to my 2 empty pennies input.