This indicator was originally developed by Charles Le Beau and popularized by Dr . Alexander Elder in his book "Come Into My Trading Room: A Complete Guide to Trading" (2002).
In short, this is a trailing stop-loss based on the (ATR).
- Added Buy/Sell alerts
- Added Buy/Sell labels
- Fix erratum
- Updated to v4
- Added long/short state highlighting
Lets hope this makes sense :) :
It wont close the position when long exit (SL price) is hit. It waits one more additional bar and then it's close at the end IF, this new bar close is below the SL level.
So, if it's a 30 min bar, we are at bar #1 - price drops down below stop loss price line (SL should be executed and is if you used this price)
Script flashes the Sell signal, price moves up, signal is gone (completely acceptable behaviour for some type of indicator scripts but not for stop orders)
Then, bar #1 closes above the SL level.
Next bar, bar #2, opens and drops below the SL price, Sell signal is flashed again,
and ONLY if bar #2 closes below SL, Sell signal becomes permanent.
Now, to use that, I have to use "on bar close" for my alert and in this example, it's close to 1 h later the SL price was crossed. Smells like serious disaster. :)
There is no option available to make it behave like real world SL would.
So, if you use the SL levels as indicators for SL orders, you will end up being stopped out and the script continues as it was still long. So, it goes out of sync with the real world.