Trailing Stop

Do you use trailing stop?

If No could you explain why? and if Yes could you explain how you set it up for each individual trade?

Personally I don't use them for the following reason. According to the Absolute Fibonacci Framework, the spaces between 'sticky' lines vary. The currencies retrace to these lines, pause on them as they move, and turn on them when there is a reversal. So, if you put in a trailing stop, and it is fixed and unable to take into account the variations of retracements, the trailing stop will take you out of the trade unnecessarily on many occasions.

thanks niceguy.

I use a trailer in certain situations. I like them for shorter term momentum trades. But as soon as I get 15 or 20 pips up I change it to a hard stop just above my entry so no matter what, the trade can't become a loser. I will also use them in conjuction with a limit when I will not be watching the trade.

If I have a trade open with TP=15, SL=15 TS=6, how will this Trailing Stop of 6 effect the trade?
Thanks

Sometimes I do sometimes I dont at all.Depends on the situtation at that specific period of times,market,judgement ect....

At a certain time it feels stupid to use it and at a time it is wise.But anyway it depends on idividual and trading style.

I just understand Trailing Stops yet.
If I have a trade with a TP=15 SL=15 and TS=6
How does the TS of 6 effect this trade? TS doesn't override TP does it?
If the price moves in my favor 6 pips does it move my SL up to it now so if my TP of 15 isn't hit at least I'll still break even with a TP of 6? is that right?
I've read elsewhere that it just moves the SL up 6 pips.
Thanks

I think it is absolutely necessary to use a trailing stop.. Key to success in trading is to let your winners run and cut your losses short. Well the only way to do that is let your open position ride for as long as possible.

For example. I have a position open now, Im not going to say in what pair, but it is up quite a bit. When I opened it, it went in my favor then turned 50 pips against me. I of course had a stop, but it was never hit. It then turned 100 pips in my favor, well at that point I set it to break even for I realized the market was going to remain bullish. it dropped 50 pips at which point alot of people would have called it quits but I held onto it. The position has nearly tripled (in terms of floating profit) and I have locked in 170 pips of profit using trailing stops.

Locked in 170pips? wasn't you TP target hit? or if you use a Trailing stop, do you not use a TP? or does TS override TP?

If you have a TS set and it is triggered by the correct price, it moves SL up to bid price, correct?

Superdezign is 'trend following' in the particular trade he mentions. In such a trade a TP will limit your profits. A trailing stop on the other hand will keep you in the trade when the expected retraces occur and take you out of the trade if it retraces to a point that the trend may be over. You give back some of the trade so 'trend followers' take their part out of the middle and do not try to call tops or bottoms.
Jacko has an interesting way to play these, chk his journal in the journal section.

To me i feel that with trailing stop your made pips is secured, though it depends on the kind of system but a system without a trailing stop is like a system without money management.. For me i don't use take profit because profit target is never cast in stone but i can assure you that it is a shades of gray therefore therefore our predetermined target is always less or more than what the price is having in its mind.

For my trend system that I trade I do use a trailing stop. They can be very effective, especially if my manual signal to exit is occurring and I happen to be unavailable for the position close, the TS will protect me and although I may not exit at the optimum position, I am very close. I use this in addition to my manual exit criteria. The TS is hit about 50% of the time and like I said, it's normally due in part to a trend reversal anyway, where I would be closing my position +/- a few pips.

How I set it up: I have a set stop loss that I have chosen for various pairs that I trade based on their daily volatility and my system back and forward testing max drawdown. I then use the 40period ATR 4HR for the trail setting. example USD/JPN..
I entered a short at 113.86 tonight. My S/L is -100 (114.86), that ATR on the 4hr is 41 so I set my trailing position at 41. As the pair move in my favour every 41 pips the stoploss moves 41pips in my favour. As it stands now, the pair has reached a low of 113.09 (just short of 2x41 pips) so my stop has already moved 41 pips to 114.45.

One of two things will happen now. I will either manually exit the trade when I see a reversal occur based on my system rules or the trend will continue and my stop will continue to trail downward reducing my initial risk and eventually locking in profits.

Where it has failed: Large spikes in the market much in part to news releases, but my initial stop is normally far enough away for the respective pair that I am normally protected, but it has happened.

Although I am in no part a "Newbie" and have been here for awhile, don't take my word for it. I recommend that you apply it or something similar to your trend following system in a backtest format model to see if it fits your system. I backtested my model for over 7 years of data (almost 400 trades) so I was confident in it from the start. However not all systems will work well with a TS. Hope this helps

Cheers
Pete

T-stops protect pips but that doesn't mean they always let winners run. I think we need to be careful with it, otherwise all it does is drag your stop into the noise and cut your profits short unneccessarily. I still use T-stop occasionally but i'm not as enthusiastic about it as I used to be.

This is very true. And especially for trend following trades it is a much better idea to simply look at your chart and "trail" your stop safely below solid S/R areas rather than using your broker's mechanical trailing system. Your broker's platform has no idea where the large areas of supply and demand are in the market and like you said, the mechanical trail will likely just drag you right into the middle of the chaos.