Forex Forum to Share, Discuss, Communicate and Trade Forex

what is a trailing stop?

This forum is for Forex education and for teaching and learning the ropes of trading.
Image

what is a trailing stop?

Postby Isaiah » Wed Apr 18, 2012 11:46 pm

can someone please tell me what is a trailing stop and how to use those in forex trading? I know the meaning as such but wish to know if these can be automated on forex platform. Also it will be helpful to know what logic should be used behind that?
Isaiah
 
Posts: 3
Joined: Wed Oct 19, 2011 2:40 am

Re: what is a trailing stop?

Postby eur/usd trader » Thu Apr 19, 2012 7:38 am

Isaiah wrote:can someone please tell me what is a trailing stop and how to use those in forex trading? I know the meaning as such but wish to know if these can be automated on forex platform. Also it will be helpful to know what logic should be used behind that?


Trailing stop loss orders trail the price if the market moves in the favorable direction. Suppose you buy a currency pair and your stop-loss is 50 pips below the entry price and your profit target is 100 pips above the entry price. Now suppose that the price moves up by 50 pips and then falls back 100 pips then it would meet the stop-loss and you will end up making a loss. Now suppose that when the price moved up 50 pips and at that time you had moved up the stop-loss up by 50 pips then you would have come out of the trade at no profit no loss.

So basically a trailing stop order or stop loss order moves with the price if the price moves in the direction anticipated so that even if the price reverses and goes against you, your loss is minimized.

And yes, on most of the trading platform you can make automated trailing stop loss orders. The caution is that do not make it too close to the morice movement. The prices can always be volatile and if you keep a very narrow margin then it may just meet your stop order before moving again in your favorable direction.
eur/usd trader
 
Posts: 17
Joined: Wed Oct 19, 2011 3:41 am

Re: what is a trailing stop?

Postby Haley12 » Tue Apr 24, 2012 10:41 am

A stop-loss order set at a percentage level below the market price - for a long position. The trailing stop price is adjusted as the price fluctuates. The trailing stop order can be placed as a trailing stop limit order, or a trailing stop market order.
http://www.ask-fx.com
User avatar
Haley12
Senior Member
 
Posts: 658
Joined: Wed Sep 21, 2011 7:00 am

Re: what is a trailing stop?

Postby Alchemist » Mon May 07, 2012 1:14 pm

You can also use previous swing lows or highs to determine trailing stops. For example, in an uptrend, if price keeps moving in your favour you would move your stop to just below each new swing low. I prefer this approach to using a certain number of pips, or a percentage. It comes down to personal preference and experience.
"He who understands nothing is worthless." ~ Paracelsus
User avatar
Alchemist
Senior Member
 
Posts: 61
Joined: Wed May 02, 2012 1:43 pm
Location: England

Re: what is a trailing stop?

Postby levin.reta » Sun Jun 24, 2012 2:31 pm

Technically speaking, trailing stops help to ride the trend for more profits....however, it does not work well in forex market where the direction of any currency pair is not riding in one direction for a long time.

Trailing behind Support / Resistance still makes some sense for some guys.

For me, i prefer to walk out with profits which should be twice / thrice the risk....big retracements really kill profits badly.

Thanks,
Lev
levin.reta
 
Posts: 4
Joined: Sun Jun 24, 2012 2:05 pm

Re: what is a trailing stop?

Postby Jack Francisco » Wed Sep 05, 2012 7:08 am

Isaiah wrote:can someone please tell me what is a trailing stop and how to use those in forex trading? I know the meaning as such but wish to know if these can be automated on forex platform. Also it will be helpful to know what logic should be used behind that?


trail stop is a unique tool available in the trading platform which helps the trade to have a profit. Once the positions / trades are positive or winning attaching a trails stop will help the trader to have some profits guaranteed because it will close the trade (as per the pips defined while setting the trail stop)once the position start moving back. So its a great tool to be used in my opinion. :)
Jack Francisco
 
Posts: 48
Joined: Fri May 04, 2012 8:55 am


Return to Forex Education Forum

 

Who is online on Forum

Registered users: Baidu [Spider], Bing [Bot], Google [Bot], Google Adsense [Bot], John Harry, Yahoo [Bot]