As a Forex trader, most of us have heard the motto “cut your losses short and let your profits run.” It sounds simple enough, right? Well, to be honest, it really isn’t if you’re not familiar with the very useful tool for all traders known as the trailing stop. The trailing stop is just like a typical stop and loss order with the difference being you can move it along with the market’s volatility.
The purpose of the trailing stop is to increase your profit loss as the market moves, giving you the ability to breathe easier while not needing to intervenor adjust anything. It allows you to cruise along with trends at the pace your most comfortable with. It’s so nice to have this tool at your disposal because you can get sleep knowing that while the market is totally unpredictable more times than not, but having a trailing stop placed, your trade will adjust itself or stop out completely. If we instead allow more room for erratic behavior when it comes to price, we will end up giving up potential profits; and if we place the stop loss too close, we migh texit the trade too soon.
You can set a trailing stop either manually or by using an automated method. An automated method can be written to follow a preset idea or set of rules and be left to run. A manual method allows more freedom to handle how price moves but does require you to monitor closely. Price movement in the market is not slow and steady, it is however often sporadic and random at times, and that's why although you have this tool to use, you need to be careful with your decisions. Some trailing stop strategies you should be aware of is the momentum-based trailing stop which is the most basic technique you can use to get a good exit point. The other strategy for trailing stop is called stop and reverse, (SAR), which provides stop-loss for both sides of the market moving each day with steady changes in price.
By being trained and taught to trade by The Apiary Fund, I have been fortunate enough to have access to a ton of educational information on my trading journey, which has helped me feel not only confident but supported. Apiary Fund reviews trailing stops frequently, so check out what they can do if you haven't.