I have come across trailing stop losses in several discussions but I am not clear on how they function or why they are important. It seems others have mentioned them but their explanations were hard to follow. Are they beneficial for everyday trading or just an unnecessary complication? I would like to grasp the key points before exploring new strategies.
A trailing stop loss keeps your profits secure as it adjusts with the price. Set it about 20-30 pips below the price based on market conditions. When your trade is in profit, it moves up with price increases, locking in gains. If the price drops and hits the stop, you exit with a profit. It’s useful for strong trending trades since it allows you to stay in without worrying about exit timing. Be cautious with the distance; if it’s too tight, normal fluctuations can trigger it too early.
A trailing stop loss adjusts with your winning trades and does not fall back. When prices rise, your stop loss moves up. If prices drop, the stop remains and triggers if hit.
This method safeguards profits while allowing trades to continue. Otherwise, it’s easy to exit too early or lose hard-earned gains.
It can be effective for day trading, but be careful with the distance. Setting it too close can lead to being stopped out during normal fluctuations.
My biggest regret was not using trailing stops on a gold trade that went up 150% before crashing back to breakeven.
Trailing stops follow your winning trade up but never move down. So if you’re up 50% and set a 20% trailing stop, you’re guaranteed at least 30% profit even if it tanks.
Complete game changer for swing trading.
Trailing stops lock in profits. They adjust up with price increases but remain fixed if prices drop. This method minimizes loss while maximizing potential gains.
Use it to protect gains. I set mine 15 pips under the price.