Indicator - Chande Kroll Stop
Calculation Chande Kroll Stop
Preliminary high stop = HIGHEST[p](high) - x * Average True Range[p]
Preliminary low stop = LOWEST[p](low) + x * Average True Range[p]
Short stop = HIGHEST[q](Preliminary high stop)
Long stop = LOWEST[q](Preliminary low stop)
Interpretation Chande Kroll Stop
This indicator a potential stop for a position (short or long). It is displayed as a red and green line overlaid on the price chart. The green line is the stop level for a long position and the red line is the stop level for a short position. It is calibrated on the true range and for this reason, it is independent from the instrument's volatility. Remember, true range is the highest in absolute value of the 3 following values:
(Current bar High-Current bar Low)
(Current bar High-Previous bar close)
(Current bar Low-Previous bar close).
The preliminary stops are situated under the high and above the low of the last p bars, with the difference being proportional to the average true range over P bars.
It is possible to place a stop buy upon breakout of the upper band; and a stop sell upon breakout of the lower band.