Chande Kroll Stop
Last updated
Last updated
The Chande Kroll Stop is a trend-following indicator designed to help traders set dynamic stop-loss levels. Developed by Tushar Chande and Stanley Kroll, it adapts to market volatility and aims to protect your trades without getting you stopped out too early.
Instead of using fixed values, this tool adjusts according to recent price movements, helping you ride trends longer while managing risk better.
The Chande Kroll Stop calculates a stop-loss level based on the Average True Range (ATR) over a selected period. It places a trailing stop either below a long position or above a short position, depending on the market direction.
Key components:
Long Stop: Based on the lowest low over a period minus a multiple of the ATR.
Short Stop: Based on the highest high over a period plus a multiple of the ATR.
The indicator continuously updates, tightening stops as the trend progresses.
🔵 For long trades: Watch for the blue stop line below the price. If the price falls and touches this line, it's a signal to exit your long position.
🔴 For short trades: Look for the red stop line above the price. If the price rises and touches this line, it’s time to exit the short trade.
In simple terms: When the price crosses your stop line, it's time to rethink your position!
ATR Period: 10–20 (common)
Multiplier: 2–3x the ATR
Adjust based on your risk tolerance. Higher ATR multipliers = looser stops (more room, but bigger losses if wrong). Lower ATR multipliers = tighter stops (less risk, but more frequent stop-outs).
The Chande Kroll Stop is best combined with trend indicators like Moving Averages or ADX.
✅ Example strategy:
Enter trade when a trend is confirmed (e.g., 50 EMA slope up for longs).
Set stop-loss using the Chande Kroll Stop level.
Adjust your stop dynamically as the market moves.
Exit trade if price crosses your stop.
This method helps you avoid emotional exits and stick to a disciplined plan.
❌ Relying solely on the stop line for entries. ❌ Ignoring overall market trend or momentum. ❌ Setting the ATR multiplier too small, causing premature exits.
Always use the Chande Kroll Stop as a support tool, not the only guide for decision-making!
The Chande Kroll Stop is perfect for traders who want structure and discipline. It doesn’t predict market direction — it simply protects you as the trend develops.
By combining it with other indicators and sound risk management, it becomes a powerful ally in your trading toolkit! 🚀
