Trailing Stop Help | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

To Trailing Stop or Not To Trailing Stop.... 37 replies

Looking for Trailing Stop EA like default MT4 trailing stop 7 replies

Trailing stop after up some pips and question trailing step 3 replies

Trailing step and trailing stop optimization 0 replies

Buy Stop and Sell Stop orders with OCO and Trailing Stop 0 replies

Trailing Stop Help

  • #1
  • First Post: Jun 2, 2007 5:34am Jun 2, 2007 5:34am
Hello Everyone:

I was hoping I could get some help here on a basic question, although to me I'm not quite getting it.

Can I get an explanation of a trailing stop. I do understand what a trailing stop is for, but for some reason I have a hard time using it in my trading.
So, here I will use examples....lets say I have a long order and I'm up say 50 pips. I want to protect that proft while still letting the currency pair run. What kind of trailing stop order would I want to put on and how would that effect my order? Also, when would be the appropriate time to place a trailing stop order, I'm kind of confused as to when I should place it.

If anyone can give me a brief explantion on the correct way to use trailing stops, I would greatly appreciate it.

Thanks so much..

M.
  • #2
  • Jun 2, 2007 6:08am Jun 2, 2007 6:08am
Quoting marcf
Hello Everyone:

I was hoping I could get some help here on a basic question, although to me I'm not quite getting it.

Can I get an explanation of a trailing stop. I do understand what a trailing stop is for, but for some reason I have a hard time using it in my trading.
So, here I will use examples....lets say I have a long order and I'm up say 50 pips. I want to protect that proft while still letting the currency pair run. What kind of trailing stop order would I want to put on and how would that effect my order? Also, when would be the appropriate time to place a trailing stop order, I'm kind of confused as to when I should place it.

If anyone can give me a brief explantion on the correct way to use trailing stops, I would greatly appreciate it.

Thanks so much..

M.
In essence the TS doesn't come into effect until a trade is in profit, as you know. Until that time a hard stop prevents too great a loss if the trade goes against you in the early stages of a trade. (I expect you know this, but the clarification is for others who may not fully understand it)
Now the hard part. You should have a potential take profit area in mind as the trade is placed. At that point you could close all the trade at the TP level, or, another way that's used by some traders, close part of the trade and place a TS to take advantage of any further growth in your trade.
The level of TS should be based on the dynamics of the pair you're trading. Obviously you don't want to get stopped out by market noise, at the same time you don't want to give back too much.
For example, look at the average range for the pair you're trading and set the TS to a figure slightly greater than that.
A lot will depend on the time-frames you trade. I use dailies and will give Cable around 75 pips trail, if I use one.
Another way is to assess the S/R levels for the pair and set hard stops above/below those levels to give trades room to breathe.
It's a hard call, and all of us can look back at TS settings that have cost us loads of pips after it's been hit and the trade developed further. That's just part of trading, I'm afraid.
I hope this helps a little, and I'm sure others will chip in with great advice as well.
  • #3
  • Jun 2, 2007 7:16am Jun 2, 2007 7:16am
Thanks Peter.

Quoting PeterFM
In essence the TS doesn't come into effect until a trade is in profit, as you know. Until that time a hard stop prevents too great a loss if the trade goes against you in the early stages of a trade. (I expect you know this, but the clarification is for others who may not fully understand it)
Now the hard part. You should have a potential take profit area in mind as the trade is placed. At that point you could close all the trade at the TP level, or, another way that's used by some traders, close part of the trade and place a TS to take advantage of any further growth in your trade.
The level of TS should be based on the dynamics of the pair you're trading. Obviously you don't want to get stopped out by market noise, at the same time you don't want to give back too much.
For example, look at the average range for the pair you're trading and set the TS to a figure slightly greater than that.
A lot will depend on the time-frames you trade. I use dailies and will give Cable around 75 pips trail, if I use one.
Another way is to assess the S/R levels for the pair and set hard stops above/below those levels to give trades room to breathe.
It's a hard call, and all of us can look back at TS settings that have cost us loads of pips after it's been hit and the trade developed further. That's just part of trading, I'm afraid.
I hope this helps a little, and I'm sure others will chip in with great advice as well.
  • #4
  • Jun 2, 2007 7:36am Jun 2, 2007 7:36am
After I have achieved a Specific Objective, my TS kicks in at 20% of Max Profit for the Trade.
  • #5
  • Jun 2, 2007 7:40am Jun 2, 2007 7:40am
Quoting marcf
Thanks Peter.
At this stage, it seems hard to not get all the pips in a move, but it's a fact of life.
FX is too volatile to plan EXACTLY what you may, or may not, get from any one trade.
Dial has a saying which made all the difference to me...'It's not the result of one trade that counts, it's the results from many'. (or something like that)
I rarely take partial profits now, for the simple reason that I asked the question in my own thread, and the answers showed where I had my thinking wrong.
90% of my trades enter with xx lots, and close with xx lots. If I leave a trail running it's usually only 1 lot and a TS based on the average of the last couple of days range for that pair. But even that's not hard & fast and is only to see if a few more pips can be squeezed out of a trade. More often than not I woud have been better to close all the lots at the same time, and go hunting for more trades.
One thing you HAVE to learn in this business is to forget the trade you've just closed from a profit point of view. By all means see if your entry or exit COULD have been better, but regret is another of those emotions that they tell you to leave at the door of your trading room.
I've stopped looking back at the distant past in order to stop myself wondering where my account WOULD be if I'd not set a TS so close. Like most things in FX ...woulda, coulda, shoulda stops you concentrating on the next trade.
  • #6
  • Jun 2, 2007 10:15am Jun 2, 2007 10:15am
Ok, so lets say I set a SL @ 40, does that mean every time the price moves 40 pips my sl will move with it?? I'm just a little unclear in regards to setting the SL.

Thanks...

M.

Quoting PeterFM
At this stage, it seems hard to not get all the pips in a move, but it's a fact of life.
FX is too volatile to plan EXACTLY what you may, or may not, get from any one trade.
Dial has a saying which made all the difference to me...'It's not the result of one trade that counts, it's the results from many'. (or something like that)
I rarely take partial profits now, for the simple reason that I asked the question in my own thread, and the answers showed where I had my thinking wrong.
90% of my trades enter with xx lots, and close with xx lots. If I leave a trail running it's usually only 1 lot and a TS based on the average of the last couple of days range for that pair. But even that's not hard & fast and is only to see if a few more pips can be squeezed out of a trade. More often than not I woud have been better to close all the lots at the same time, and go hunting for more trades.
One thing you HAVE to learn in this business is to forget the trade you've just closed from a profit point of view. By all means see if your entry or exit COULD have been better, but regret is another of those emotions that they tell you to leave at the door of your trading room.
I've stopped looking back at the distant past in order to stop myself wondering where my account WOULD be if I'd not set a TS so close. Like most things in FX ...woulda, coulda, shoulda stops you concentrating on the next trade.
  • #7
  • Edited 1:36pm Jun 2, 2007 11:15am | Edited 1:36pm
Quoting marcf
Ok, so lets say I set a SL @ 40, does that mean every time the price moves 40 pips my sl will move with it?? I'm just a little unclear in regards to setting the SL.

Thanks...

M.
and you've set the TS to 40 pips the TS will move up with price.

So, here's an example:

  1. Buy 1.5000
  2. SL 1.4960
  3. Price moves to 1.5010
  4. SL stays at 1.4960
  5. Price moves to 1.5041
  6. TS takes over and moves your SL to 1.5001
  7. Price moves to 1.5042
  8. TS takes over and moves your SL to 1.5002
  9. Price moves to 1.5075
  10. TS takes over and moves your SL to 1.5035
  11. Price moves back down to 1.5065
  12. TS stays at 1.5035

Etc.....

With most borkers TS moves pip by pip. Some, I understand, move in set amounts, say 5 or 10 pips. IBFX does pip by pip

  • #8
  • Jun 2, 2007 1:35pm Jun 2, 2007 1:35pm
With MetaTrader the TS is set on the client computer, so you need to be logged in with the charting software running (minimised is OK from what I've read).
If you close the program, or disconnect in any other way, the last price set by the TS becomes a hard stop until you re-run the program.
Some borkers (EFX, I'm sure) have server-side TS functionality, so you'll need to check with the broker you're with for all the points I've covered here.
Have a good weekend.
  • #9
  • Jun 2, 2007 5:23pm Jun 2, 2007 5:23pm
Great, thanks!!!

Quoting PeterFM
and you've set the TS to 40 pips the TS will move up with price.

So, here's an example:

  1. Buy 1.5000
  2. SL 1.4960
  3. Price moves to 1.5010
  4. SL stays at 1.4960
  5. Price moves to 1.5041
  6. TS takes over and moves your SL to 1.5001
  7. Price moves to 1.5042
  8. TS takes over and moves your SL to 1.5002
  9. Price moves to 1.5075
  10. TS takes over and moves your SL to 1.5035
  11. Price moves back down to 1.5065
  12. TS stays at 1.5035

Etc.....

With most borkers TS moves pip by pip. Some, I understand, move in set amounts, say 5 or 10 pips. IBFX does pip by pip

  • #10
  • Jun 14, 2007 4:48am Jun 14, 2007 4:48am
Quoting PeterFM
and you've set the TS to 40 pips the TS will move up with price.

So, here's an example:

  1. Buy 1.5000
  2. SL 1.4960
  3. Price moves to 1.5010
  4. SL stays at 1.4960
  5. Price moves to 1.5041
  6. TS takes over and moves your SL to 1.5001
  7. Price moves to 1.5042
  8. TS takes over and moves your SL to 1.5002
  9. Price moves to 1.5075
  10. TS takes over and moves your SL to 1.5035
  11. Price moves back down to 1.5065
  12. TS stays at 1.5035

Etc.....

With most borkers TS moves pip by pip. Some, I understand, move in set amounts, say 5 or 10 pips. IBFX does pip by pip

My question is in regards to METATRADER:
if I place a SL at 40 pips and set Trailing at 15 I will need to have the price move in the right direction for 15 pips before Trailing Stop kicks in and it will then keep a distance of 40 from the market ? Is it not possible to have it working from the start ? Market moves 1 pips and the SL moves up 1 tick ?

This is possible to do SaxoBank's platform, you set the Trailing Step to 0 and works immediately.
The quality of your life is brought about by the quality of your thinking.
  • #11
  • Last Post: Jun 14, 2007 6:17pm Jun 14, 2007 6:17pm
If you are in 50 pip profit and you move your stop to break even, you just did a manual trailing stop. If you want to get on an airplane and fly to Thailand, remove the limit and set an automatic trailing stop to close your trade. Maybe when you get to Thailand it will still be going your way. Or when you wake up from this dream. I usually regret using the trailing stop. Rarely use them now.

GOOD LUCK
0 traders viewing now