Chande-Kroll Stop

The Chande-Kroll Stop is a volatility-based trailing stop indicator developed by Tushar Chande and Stanley Kroll. It calculates dynamic stop-loss levels based on the Average True Range (ATR), providing both a long stop (support) and short stop (resistance) that adapt to current market volatility. It helps traders set intelligent stop-loss levels that account for normal price fluctuations.

The Chande-Kroll Stop is calculated in three steps:

1. First Stop (highest/lowest of ATR trailing stop):
   stop_long_initial  = Highest High(N) - ATR_mult * ATR(atr_period)
   stop_short_initial = Lowest Low(N)   + ATR_mult * ATR(atr_period)

2. Final Stop (smoothed over stop_period):
   CHANDE_KROLL_LONG  = Highest(stop_long_initial, stop_period)
   CHANDE_KROLL_SHORT = Lowest(stop_short_initial, stop_period)

The long stop rises during uptrends and provides dynamic support. The short stop falls during downtrends and provides dynamic resistance.

• ATR-based — Automatically adjusts to current volatility
• Dual stops — Provides both long and short stop levels simultaneously
• Trailing mechanism — Stops move in favor of the trend and hold during retracements
• Trend filter — Price position relative to stops indicates trend direction

Buy signals

• Price crosses above CHANDE_KROLL_LONG (bullish trend starting)
• CHANDE_KROLL_LONG crosses above CHANDE_KROLL_SHORT (long stop above short stop — bullish)
• Price holds above both stop lines (confirmed uptrend)

Sell signals

• Price crosses below CHANDE_KROLL_SHORT (bearish trend starting)
• CHANDE_KROLL_SHORT crosses below CHANDE_KROLL_LONG (short stop below long stop — bearish)
• Price holds below both stop lines (confirmed downtrend)

| Parameter | Default | Description | |-----------|---------|-------------| | ATR Period | 10 | Period for ATR calculation | | ATR Multiplier | 1.0 | Multiplier for ATR distance | | Stop Period | 9 | Smoothing period for final stop levels |

| Component | Description | |-----------|-------------| | CHANDE_KROLL_LONG(10) | Long stop level (support) | | CHANDE_KROLL_SHORT(10) | Short stop level (resistance) |

| Condition | Description | |-----------|-------------| | close > CHANDE_KROLL_LONG(10) | Price above long stop (bullish) | | close < CHANDE_KROLL_SHORT(10) | Price below short stop (bearish) | | close cross_over CHANDE_KROLL_LONG(10) | Bullish crossover of long stop | | close cross_under CHANDE_KROLL_SHORT(10) | Bearish crossover of short stop | | CHANDE_KROLL_LONG(10) > CHANDE_KROLL_SHORT(10) | Bullish stop alignment |

• The Chande-Kroll Stop excels as a dynamic stop-loss placement tool — use it to set and trail stops
• Higher ATR multiplier = wider stops (fewer whipsaws but larger losses per trade)
• Lower ATR multiplier = tighter stops (more whipsaws but smaller losses per trade)
• When both stops converge, it indicates a consolidation — prepare for a breakout
• Works well combined with trend indicators like ADX to confirm trend strength
• Can be used as entry and exit signals simultaneously: enter on stop break, exit on opposite stop break