How To Trade The Market Using The Chande Kroll Stop Indicator

There are so many ways to analyze the financial markets using indicators each indicator has what it is created for, which as for Chande Kroll stop, is an indicator that helps traders to identify the perfect place stop loss order can be placed. Identifying the optimal placement of a stop loss before entering the market is very important and in this post, more about the Chande Kroll stop indicator has been discussed.

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Chande Kroll Stop

As we have introduced, the Chande Kroll stop is an indicator that helps you specify the most desirable place to set your stop loss order. When analyzing the market or placing a trade most traders, don't know the perfect place stop loss order should be placed which is why Stanley Kroll and his best friend, Tushar Chande came together and introduced this indicator to help crypto traders overcome or reduce the market volatility in trading.

Tradingview

By main looking at the indicator as applied on the STEEM/USDT chart you will see it has three lines which are the green, red, and average crosses which are all components of the change Kroll stop indicator.

The purpose why the indicator was introduced by the two best friends, we introduced earlier, is to help traders, identify potential stop loss levels, which happens by tracking the highest price an asset has reached and adjusting the stop once the asset has fallen. With this, you will be able to minimize your losses.

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The Green and Red Line Crosses

In the financial markets, green represents a bullish market, whereas red represents a bearish market, which is also the same thing applicable here. However, using this indicator both the green line and red line crosses represent your potential entry point and exit point in the market.

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Average true range:

Due to the volatile nature of cryptocurrency, it is hard to predict the market perfectly, and the cande Kroll Stop adopts the use of average true range (ATR) for you to understand the market perfectly.

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Calculation

Three elements are involved before you can calculate the candle Kroll stop indicator.

ATR: This is what helps you to know the volatility of the market.

Multiplier: This set between the range of 3 and 1, which is what modified the ATR based on your risk tolerance.

Price: This represents the existing price of the asset being analyzed.

With that being said, the given formula below is used for calculating the change Kroll stop indicator.

Initial high stop = HIGHEST [p] (high) – x * Average True Range [p]

Initial low stop = LOWEST [p] (low) + x * Average True Range [p]

Shortstop = HIGHEST [q] (Initial high stop)

Long stop = LOWEST [q] (Initial low stop).

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How You Can Use The Chande Kroll Stop Indicator

Use can use this indicator to place stop loss and identify your entry point which here will be looking at how it can be done.

For Stop-loss

Note that, risk tolerance is very important when it comes to trading knowing that, let's move ahead.

Tradingview

Once your parameters have been selected and applied to your chart, you can then set your stop loss which for a long position, your stop loss should be placed below the blue line, and change it immediately when the indicator adjusts it moves. For a short position, you can move it above the orange line.

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Entry Signal

Tradingview

Even though the change is best used to identify stop loss, you can still use it also to identify an entry point, which you should look for when the log stop line moves out of the stop line which is a sign of a bullish move. A short position can become the opposite of this.

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Disclaimer

_{Knowing the desire to place a stop loss order would be a win for you to avoid liquidating your account in this post, we have what the Chande Kroll Stop Indicator is. Please, note that this post is strictly prohibited as investment advice, but serves as education content.}

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