Chande Kroll Stop Indicator Explained

From Chande and Kroll's The New Technical Trader, the Chande Kroll Stop maintains two stop lines at once — one below price for longs, one above for shorts — each built from ATR-buffered extremes with an extra smoothing pass to resist whipsaw.

How It Works

• Preliminary stops: highest high − x·ATR and lowest low + x·ATR.
• A second pass takes the extreme of the preliminary stops over q bars.
• Both lines plot continuously, defining a volatility corridor.

How to Trade It

Beyond trailing exits, the dual lines make a state machine: price above both = long regime, below both = short regime, between = no-man's-land where entries wait. Crossing both lines is a stronger flip signal than crossing one.

Building It in Setup.Cash

Add Chande Kroll Stop in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. See the ATR Trailing Stop for the single-sided classic. For the full category overview, see the volatility & statistics library guide.

Volatility indicators qualify trades rather than generate them — backtest your system with and without this filter and compare the drawdowns.