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The Best Strategy to Apply Trailing Stop Revealed Hey traders, In this post, I will share with you my strategy to apply a trailing stop. Please, note that I am applying a trailing stop only in trend-following trades and only when a trade is opened on a key level. I trade price action patterns, so the following technique will be appropriate primarily for price action traders. Moreover, my entries are strictly on a retest. 1️⃣ Spotting a price action pattern, I am always waiting for its neckline breakout. (if we talk about different channels, then by a neckline we mean its trend line) Once I see a candle close below/above the neckline, I set my sell/buy limit order on a retest. Stop loss will strictly lie below the lows of the pattern if we buy and above the highs of the pattern if we sell. I spotted a horizontal trading range on an hourly time frame on AUDUSD. I set a sell limit order after a breakout of its neckline. Stop loss is lying above the highs of the pattern. 2️⃣ Once we are in a trade, you should measure the pattern's range (distance from its high to its low based on wicks) and then project that range from the entry to the direction of the trade. In the picture above, the pattern range and its projection are the underlined blue areas. Once the price reaches the projection of the pattern's range, you should move your stop loss to entry and make your position risk-free. Move stop to breakeven in traders' slang. 3️⃣ Then you should let the market go. 📈If you are holding a long position, you should let the market retrace and set a higher low and then a new higher high or AT LEAST an equal high. Once these conditions are met, you can trail your stop and set it below the last higher low. 📉If you are holding a short position, you should let the market retrace and set a lower high and then a new lower low or AT LEAST an equal low. Once these conditions are met, you can trail your stop and set it above the last lower high. In the example above, stop loss was modified when the price set a new lower high. Stop loss is now lying above that. Catching a trending market you should trail your stop based on new higher lows / lower highs that the price sets. Occasionally you will catch big winners. How do you apply a trailing stop? ❤️Please, support my work with like, thank you!❤️
COINBASE:BTCUSDEducation
by VasilyTrader
2
Learn What is TRAILING STOP LOSS | Risk Management Basics In the today's article, we will discuss a trailing stop loss. I will explain to you its concept in simple words and share real market examples. 🛑 Trailing stop loss is a risk management tool that allows to protect unrealized profits of an active trading position as long as the price moves in the desired direction. Traditionally, traders trade with fixed stop loss and take profit. Following such an approach, one knows exactly the level where the trade will be closed in a profit and the level where it will be closed in a loss. Take a look at a long trade on USDCAD above. The trade has fixed TP Level - 1.354 and fixed SL Level - 1.341. Once one of these levels is reached, the trade will be closed. Even though the majority of the traders stick to fixed sl and tp, there is one important disadvantage of such an approach – substantial gains could be easily missed. After the market reached TP in USDCAD trade, the price temporarily dropped, then a strong bullish rally initiated and the price went way above the Take Profit level. Potential gains with that long position could be much bigger. Trailing stop solves that issue. With a trailing stop loss, the trader usually opens the trade with Stop Loss and WITHOUT Take Profit. Take a look at a long trade on USDCHF. Trader expects growth, he opens a long position and sets stop loss – 0.8924, while take profit level is not determined. As the market starts growing, one decides not to close the trade in profit, but modify stop loss – trail it to the level above the entry. As the market keeps rallying, one TRAILS a stop loss in the direction of the market, protecting the unrealized gains. When the market finally starts falling, the price hits stop loss and a trader closes the trade in a substantial profit. The main obstacle with the application of a trailing stop is to keep it at a distance from current price levels that is not too narrow nor too wide. With a wide stop loss distance, substantial unrealized gains might be washed out with the market reversal. Imagine you predicted a nice bullish rally on Bitcoin. The market bounced nicely after you opened a long position . Trailing stop loss too far from current price levels, all the gains could be easily wiped out. While with a narrow trailing stop distance, one can be stop hunted before the move in the desired direction continues. A trader opens a long trade on EURJPY and the price bounces perfectly as predicted. One immediately trails the stop loss. However, the distance between current prices was too narrow and the position was closed after a pullback. And then market went much higher In conclusion, I want to note that fixed SL & TP approach is not bad, it is different and for some trading strategies it will be more appropriate. However, because of its limitations, occasionally big moves will be missed. Try trailing stop by your own, combine it with your strategy and I hope that you will make a lot of money with that! ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
9