[Rusty99]

I have developed a ratchet chandelier stop loss for ProRealTime.
It is developed as an indicator that "hangs" a set multiple of ATR below the recent highest HIGH.
It includes a Rachet - it adds a small multiple of ATR each day after the Rachet was last reset by the indicator last falling within the range.
This works on the concept of reducing your risk the longer you hold the stock.
In the example shown below the initial setting is 1.9 * ATR - after 5 days this reduces to 1.75, after 10 days to 1.6 and after 20 days 1.3 etc.

It is easy to change the various parameters. The settings shown below are for swing trading

Indicator (as an overlay onthe main chart)

myhigh = highest[3](high) - 1.9*(AverageTrueRange[5](close))
IF (mytot > low) THEN
myx = 0
ELSE
myx = myx + 0.03
ENDIF
myextra = myx[1]*(AverageTrueRange[5](close))
mytot = myhigh +myextra
RETURN mytot

Cheers,

[Adrian]

Doesn't your risk automatically reduce when using a fixed ATR and the trend develops? Ratcheting the ATR means you may actually be increasing your risk due to getting stopped out too early. What you really wish to define is, does the optimimum ATR multiple change as a trend develops? And anyone who has studied price trends will answer that it actually depnds upon the type of trend that we are experiencing i.e. low vol to high vol, big retracements, or various other alternatives.

[Rusty99]

Originally Posted by Adrian »

Doesn't your risk automatically reduce when using a fixed ATR and the trend develops? Ratcheting the ATR means you may actually be increasing your risk due to getting stopped out too early. What you really wish to define is, does the optimimum ATR multiple change as a trend develops? And anyone who has studied price trends will answer that it actually depnds upon the type of trend that we are experiencing i.e. low vol to high vol, big retracements, or various other alternatives.

seeExit Strategy - The ATR Ratchet - ForexForums.org

There are lots of options for adjustments.

[Rusty99]

Also see

http://www.mtpredictor.com/pricing/d...ophelpfile.pdf

Cheers,