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Trailing Entries & Trailing Stops?

  • #21
  • Sep 28, 2007 6:22pm Sep 28, 2007 6:22pm
I only have two things to say about trailing entries and stops:

1. Trailing entries are very risky and should generally be avoided. The reason for this is fairly obvious - say you notice the price trending up and up and up, and you figure "hey, why not set a trailer sell order a few pips back so I can catch it on the way down?". So you do, and there's enough of a pullback in the trend to trigger your order; soon after the trend resumes and you're in the red - well in the red.

2. Trailing stops should generally be only used when you're ready to close the position anyway, and any extra gain is just a bonus. Otherwise, a temporary pullback can knock you out of a good trade, and then you're really mad.

Bottom line - you are not in control with trailing entries or exits, so use very judiciously.
  • #22
  • Sep 28, 2007 6:26pm Sep 28, 2007 6:26pm
Quoting Subdude
1. Trailing entries are very risky and should generally be avoided. The reason for this is fairly obvious - say you notice the price trending up and up and up, and you figure "hey, why not set a trailer sell order a few pips back so I can catch it on the way down?". So you do, and there's enough of a pullback in the trend to trigger your order; soon after the trend resumes and you're in the red - well in the red.
Clarification: in the case above I was referring to using trailing stops to open a position.
  • #23
  • Sep 28, 2007 7:15pm Sep 28, 2007 7:15pm
Quoting Subdude
I only have two things to say about trailing entries and stops:

1. Trailing entries are very risky and should generally be avoided. The reason for this is fairly obvious - say you notice the price trending up and up and up, and you figure "hey, why not set a trailer sell order a few pips back so I can catch it on the way down?". So you do, and there's enough of a pullback in the trend to trigger your order; soon after the trend resumes and you're in the red - well in the red.

2. Trailing stops should generally be only used when you're ready to close the position anyway, and any extra gain is just a bonus. Otherwise, a temporary pullback can knock you out of a good trade, and then you're really mad.

Bottom line - you are not in control with trailing entries or exits, so use very judiciously.
I don't personally use trailing stops for entry or exit but I don't see them as any less responsible than someone who attempts to pick a top or bottom. Waiting a few pips on the reversal at least provides an attempt to force the market to prove its intentions. They can be used in non-trending markets as well when there isn't a trend to resume. Personally, I would have a lot more warnings for different traders before I picked on trailing stop people. Like anything else in life, there are responsible people and irresponsible ones.
  • #24
  • Sep 29, 2007 4:34am Sep 29, 2007 4:34am
Quoting Subdude
1. Trailing entries are very risky and should generally be avoided. The reason for this is fairly obvious - say you notice the price trending up and up and up, and you figure "hey, why not set a trailer sell order a few pips back so I can catch it on the way down?". So you do, and there's enough of a pullback in the trend to trigger your order; soon after the trend resumes and you're in the red - well in the red.
I agree to the extent that without proper Money Management, and a little common-sense, one could come unstuck with this. However, early last year, as part of a forward test regime, I used PSAR to set buy/sell stops which trailed price up or down the chart without any consideration for all the usual factors that we normally use to validate entries. I did this purely as an experiment to see if PSAR had any use as an entry tool. In practice it worked quite well, in as much that my account grew. I then refined the whole process to only trade with the trend (determined by long-term EMAs) and set my PSAR-based entries to wait for a trend resumption after a pull back. This was far more successful. But, and this is a BIG but, I found its value was greatest during solid, steady trends, and I have now changed to Limit orders as a means of entry. I realise, before Phil jumps on me, that trends are relative to the time-frame one trades, but as I was trading purely Daily charts it worked very well up until the sub-prime shake out.
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2. Trailing stops should generally be only used when you're ready to close the position anyway, and any extra gain is just a bonus. Otherwise, a temporary pullback can knock you out of a good trade, and then you're really mad.
I'll agree with the basic premise, but for a newbie it can be hard to let profit disappear. It has taken me some time learning to set a provisional Take Profit target and holding tight until price gets close enough to make the decision to close or move a TS up close to the action. Better at this stage that a new trader gains some of the profit his/her decision has rewarded them with. In time they will also learn to judge the rhythm of the market and maximise their gains.
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Bottom line - you are not in control with trailing entries or exits, so use very judiciously.
You can be, once other skills are in place.
  • #25
  • Sep 29, 2007 4:54am Sep 29, 2007 4:54am
yeah.........trailing stops can reduce profits when used too early and trailing entry can be dangerous......roger that.......
  • #26
  • Sep 29, 2007 9:00pm Sep 29, 2007 9:00pm
I always laugh at traders and indicator system happy foks who say " This works well in trends" or trade with the trend. What the heck does that mean. Don't they all work when your on the right side of the market. ? ALso, what is "trend" ..yeh the 4 chart can be going down smoothely for days but
it can also retrace 150 pips and still be in the same "down trend".
my feeling therefore, is that trailing stops are about time frames. Im personally a 50-60 pip guy with a 4 hour trend -- even then you have to find the right part of the turn or dip/peak and have a way of getting out when the market starts to waffle.
If your trading less than a 4 hour ..lets say a 1 hour with no regard for the 4 hour..then I think your better off trading the peaks and dips ,,,and tighen your scalping stops like the daily high or low break points of pivots.. As far as the use of trailing stops...I have never had any success with them. -- I like to think of them as trails of trading death. I like indicator based getouts
just my 2cts
  • #27
  • Last Post: Mar 28, 2017 6:04pm Mar 28, 2017 6:04pm
I'm looking for an EA that will trail with my pending order. So if I'm expecting market to go up...I place my Buy Stop 20 pips above price and it trails it down 50 pips or so...then price starts going up, hits my buy stop after 20 pips up and continues up.

Revers the idea for a sell stop.

I could NOT find an EA for free so I'm having an EA built by a developer on MQL5.
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