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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (70582)

2/7/2026 5:22:14 PM

From: Johnny Canuck

Respond to of 70763

Grok Question: To prevent being "shaken out" of a major semiconductor run like the 2024–2026 AI cycle, you should transition from a Fixed Stop to a Volatility-Based Trailing Stop.

Answer:

Standard percentage stops (e.g., a flat 10%) are often too rigid for chips. If NVIDIA is moving 5% a day, a 10% stop will get hit by "noise" even if the trend is perfectly healthy. Instead, use the Chandelier Exit or an ATR-based Trailing Stop.

1. The Chandelier Exit StrategyThe Chandelier Exit is the "Gold Standard" for high-beta sectors. It "hangs" the stop-loss from the Highest High the stock has reached since you entered, adjusting for the stock's actual daily volatility (ATR).

The Formula: Stop Price=Highest High-(3×ATR)
The Parameters: Use a 22-day period (one trading month) and a 3.0 multiplier.
Why it works: If SMH becomes more volatile, the stop automatically moves further away to give the trade "room to breathe." If volatility drops, the stop tightens to lock in profits.

2. The "30/70" Trailing Stop LogicSince your system buys at 30% breadth and targets 70%, your stop-loss should evolve as the trade progresses:

Trade Phase	Stop-Loss Type	Logic
Early (Entry < 30%)	Hard Stop (-7%)	You are buying a falling knife. If it drops 7% more, the "30% reset" has failed and a 20% crash is likely.
Middle (Breadth 50%)	Break-Even Stop	Once the index crosses the 50% "neutral" line, move your stop to your entry price. You now have a "free trade."
Late (Breadth > 60%)	ATR Trailing Stop	As you approach the 70% target, switch to a 2.0 ATR Trailing Stop. This is tighter than the Chandelier Exit and ensures you exit at the first sign of a trend break.