In general, do trailing stops enhance or hinder a strategy? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

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

Enhance, Enhance, Enhance! 19 replies

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

Trailing Entries & Trailing Stops? 26 replies

Trailing step and trailing stop optimization 0 replies

In general, do trailing stops enhance or hinder a strategy?

  • #1
  • First Post: Jun 23, 2014 8:09am Jun 23, 2014 8:09am
Not a stop loss, a trailing stop.

What are peoples thoughts on this?

Anytime I have tried a trailing stop, overall it reduced the power of the edge.
  • #2
  • Jun 23, 2014 1:39pm Jun 23, 2014 1:39pm
Quoting MCRotter
Not a stop loss, a trailing stop. What are peoples thoughts on this? Anytime I have tried a trailing stop, overall it reduced the power of the edge.
automatic trails stops suck but manual trail is ok if you are close to your TP...you can never be sure that the price will actually hit your TP.
  • #3
  • Jun 23, 2014 4:25pm Jun 23, 2014 4:25pm
Quoting Vitez
{quote} automatic trails stops suck but manual trail is ok if you are close to your TP...you can never be sure that the price will actually hit your TP.
Thanks for the reply, yes, today for instance my target was 26 pips, price came within 0.5 pips and reversed, I would have to go and back test things, and because I backrest by hand this will be a very slow process. But was wondering, if I set my stop loss to trails at 10% away from my initial target it would prevent such trades from beiconing losers.im wondering if anyone had testeded something like that?
  • #4
  • Jun 24, 2014 4:45am Jun 24, 2014 4:45am
also at price where lots of people have TPs the broker will usually widen the spread so that less people get filled. you can set alert and then exit manually for instance.


"But was wondering, if I set my stop loss to trails at 10% away from my initial target it would prevent such trades from beiconing losers.im wondering if anyone had testeded something like that? "

can you explain in more detail what do you mean?
  • #5
  • Jun 24, 2014 6:53am Jun 24, 2014 6:53am
Quoting Vitez
also at price where lots of people have TPs the broker will usually widen the spread so that less people get filled. you can set alert and then exit manually for instance. "But was wondering, if I set my stop loss to trails at 10% away from my initial target it would prevent such trades from beiconing losers.im wondering if anyone had testeded something like that? " can you explain in more detail what do you mean?

So far instance.

My take profit is at lets say 50 pips for 2%, my stop loss is 25 pips for a 1% loss. So lets say price moves 45 pips in my direction (5 pips, or 10% away from my take profit), would trailing there be detrimental? I don't like normal trailing stops that take you to breakeven at even increiments, that ruins any system I have ever test that on, this way I would be ensuring, in the unlikely event my target doesn't get hit, I would still take about 1% profit.
  • #6
  • Jun 24, 2014 7:58am Jun 24, 2014 7:58am
Everyone has their opinion, of course, but I think that stops and targets that are not based on price structure don't make any sense at all. However, if trailing stops are a necessity (if you aren't available to monitor the market, for instance), then I would employ stops that are above or beneath S/R rather than arbitrary values. More money to be made that way. And then I would probably add twenty pips to those values in order to make them less prone to getting hit. Always best to manually close, IMO.
There's always money in the banana stand.
  • #7
  • Edited Jun 25, 2014 3:40pm Jun 24, 2014 5:05pm | Edited Jun 25, 2014 3:40pm
Quoting LizardGizzard
I think that stops and targets that are not based on price structure don't make any sense at all. However, if trailing stops are a necessity (if you aren't available to monitor the market, for instance), then I would employ stops that are above or beneath S/R rather than arbitrary values. More money to be made that way.
Agree 100%. I suspect that one of the main reasons why many traders lose is that they make decisions based on their own P/L, which the market does not recognize, instead of market behavior and price structure.

To state what’s possibly obvious, trailing stops are going to work work best when markets ‘trend’. Conversely, taking profits early will work better in sideways markets (explained in more detail here). If I may generalize further, I read frequently that (1) forex spends more time ranging than trending, (2) that it is less ‘trendy’ than other markets, and that (3) the best trends exist on the longer timeframes.
_________________
[EDIT] Fixed typo — changed "market does recognize" to market does not recognize".
  • #8
  • Jun 24, 2014 5:18pm Jun 24, 2014 5:18pm
Thanks for your replies guys.

My stop loss and take profit are based on a multipe of my ATR, that is what the strategy was programmed for, s/r levels are too subjective imo so I just ignore them.
  • #9
  • Jun 24, 2014 6:16pm Jun 24, 2014 6:16pm
Quoting LizardGizzard
Everyone has their opinion, of course, but I think that stops and targets that are not based on price structure don't make any sense at all. However, if trailing stops are a necessity (if you aren't available to monitor the market, for instance), then I would employ stops that are above or beneath S/R rather than arbitrary values. More money to be made that way. And then I would probably add twenty pips to those values in order to make them less prone to getting hit. Always best to manually close, IMO.


Common techniques such as moving stops to breakeven, trailing stops to lock in profit, using a fixed r:r etc. are in violation of this rule and I don't use them. Adjustments to your net positioning should ideally be based on price behavior, not on the trader's previous actions.
si hoc legere scis nimium eruditionis habes
  • #10
  • Last Post: Jun 24, 2014 6:39pm Jun 24, 2014 6:39pm
i have found automatic stops not suitable for my strategy.
also, i tend to exit my position based on technical indicators turning weak rather than price per se.
i find alerts and manual stops much more effective - but of course this assumes the discipline to exit
0 traders viewing now