Trailing Stop Loss

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Trailing Stop Loss is a Type of Forex Exit Strategy Commonly Used in Forex Trading. Trailing stop can be found in most trailing stop ea and stop loss ea.

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Presentation Transcript

Slide 1:

ForexTrailer.com Trailing Stop Loss – Another Perspective to Trade Exits

A stop loss is used to restrict the amount of loss that accrues to an investor. Based on the prevailing market conditions, trailing stop loss are shifted automatically as preset by the trader. However, the focus by most traders on the entry strategies causes them to abandon using any trailing stop loss for their trades.:

A stop loss is used to restrict the amount of loss that accrues to an investor. Based on the prevailing market conditions, trailing stop loss are shifted automatically as preset by the trader. However, the focus by most traders on the entry strategies causes them to abandon using any trailing stop loss for their trades.

Slide 3:

Forex Trading Without a Trailing Stop Loss

Some traders believe that they are smart enough to trade without a stop loss. In the end, they would realize that they had taken the wrong steps in their trading decisions; the trade result would show that. This is a case of learning the hard way. To prevent running into losses when trading, trailing stop loss is a more potent form of stop loss to use.:

Some traders believe that they are smart enough to trade without a stop loss. In the end, they would realize that they had taken the wrong steps in their trading decisions; the trade result would show that. This is a case of learning the hard way. To prevent running into losses when trading, trailing stop loss is a more potent form of stop loss to use.

The fact that the trailing stop loss order shifts when the order starts to make profit makes it an effective means of ensuring profit on a trade whenever the condition permits it. Whenever the market movements favor a trade position and profit is made, the trailing stop loss appreciates according to the magnitude of pips stipulated in the trailing stop rules. On the contrary, should the market go in undesired direction, the stop loss remains at the point where it last trailed, where if the market price hit the stop loss, it will exit the trade automatically.:

The fact that the trailing stop loss order shifts when the order starts to make profit makes it an effective means of ensuring profit on a trade whenever the condition permits it. Whenever the market movements favor a trade position and profit is made, the trailing stop loss appreciates according to the magnitude of pips stipulated in the trailing stop rules. On the contrary, should the market go in undesired direction, the stop loss remains at the point where it last trailed, where if the market price hit the stop loss, it will exit the trade automatically.

Slide 6:

Trailing Stop Loss Example

Suppose a trader buys EUR/USD at 1.3000, and he placed his stop at 1.2800. Let us say that the market price appreciated by 100 points. Should the trader shift his stop loss to the breakeven point, the profits realized would serve as the risk of trading, and he would be able to ride the profits if there is to be further upward movements. :

Suppose a trader buys EUR/USD at 1.3000, and he placed his stop at 1.2800. Let us say that the market price appreciated by 100 points. Should the trader shift his stop loss to the breakeven point, the profits realized would serve as the risk of trading, and he would be able to ride the profits if there is to be further upward movements.

Slide 8:

Trailing Stop Loss Protect Your Forex Profits

As long as the market movements favor a trader and generate profit, there will be a continuous shift of the trailing stop loss to lock in profits as specified levels are attained by the market price. The trailing stop loss also regulate the extent of loss should there be a downturn in the market trend.:

As long as the market movements favor a trader and generate profit, there will be a continuous shift of the trailing stop loss to lock in profits as specified levels are attained by the market price. The trailing stop loss also regulate the extent of loss should there be a downturn in the market trend. Survival in the Forex market is somehow tied to how well a trader makes use of the trailing stop loss.

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