Chande Kroll Stop Indicator
The Chande Kroll Stop is an MT5 indicator that helps traders lock in their profits. In addition, it is an ideal trend reversal detector.
Description
The Chande Kroll Stop Indicator is a unique Forex trading tool that will help you calculate the perfect protective stop loss for a trade. It uses the average value of the true range and the change in directional movement.
The volatility based indicator is named after its inventors Tushar Chande and Stanley Kroll. The most interesting feature of the indicator is that it is not affected by volatility. Therefore, trade reversal and volatility do not affect your stop loss.
How do you set the Chande Kroll Stop indicator?
Now, how do you use the indicator to set a stop loss? You will now see a simple guide to using the indicator.
The Chande Kroll indicator consists of two lines – a long and a short stop line, the space between which is colored blue or gray, depending on which line is higher.
Essentially, the indicator lines follow the price of the instrument. Also, it tells you the ideal stop loss levels so you can manually set your trailing stop.
Indicators are suitable for all traders. This means that you can use it to trade any instrument and any time frame.
How to trade with the Chande Kroll Stop Indicator
Before delving into buy and sell signals, it is necessary to understand how the indicator works. For bull markets, the stop is the high point of the blue zone or the low point of the gray zone. The indicator line follows the trend and stagnates when the value falls.
In a bear market, the low of the gray zone and the high of the blue zone act as a stop loss. When the price rises, the indicators stay fixed at the same point.
A buy signal occurs when the color of the zone changes from gray to blue. This signals an upcoming uptrend. On the other hand, a sell signal occurs when the color of the zone changes to gray. But, it is important that the price should be above the trend line in an uptrend and below the trend line in a downtrend.
Although the Chande Kroll Stop indicator mainly helps protect trading profits, it also shows the ideal entry and exit points for a trade.
Exit strategy
Close long positions when the price falls into the blue zone. Similarly, for short positions, close the trade when the price jumps into the gray zone.
Trading example
The chart shows the movement of the price of the British pound against the US dollar. The gray area changes its color to blue, which means a buy signal. In fact, after this signal, the price moves up. The price stays above the blue zone, which acts as a stop loss.
When an uptrend ends, the indicator line stays flat in a flat. Eventually, the color of the zone changes, indicating a perfect sell signal. The price moves down below the zone, which acts as a stop loss. This is a good sell signal.
Conclusion
The Chande Kroll Stop helps traders protect their trades, especially when they are profitable. The case of turning a profitable trade into a losing one will remain in the past. The indicator zone acts as a trailing stop loss, with the blue zone acting as a long stop during an uptrend and the gray zone acting as a short stop during a downtrend. This is a useful indicator for every trader.