Trailing stop is used to lock your profit. To use trailing stop, right click the floating position, in the “terminal” window, you would like to apply the trailing stop, choose “Trailing Stop”, and pick the desired points.
Let say if you have a positive floating “buy” position. You are not so sure that the price will go further up, but in the mean time, you are not so sure either that the price will go down. In this condition, just use the Trailing Stop. For example if you use “15 points Trailing Stop”, your current price is at 1.500, it means that you are locking your profit at the price of 1.485. When the price reaches 1.485, your position will be closed automatically. However, if the price goes up, let say it raises until at 1.585, you are locking your profit at the price of 1.570. (Try it in your virtual account first to get further understanding)
Only disadvantage in my opinion is that it has to be set from the current market price. Does anyone know a workaround that can allow a trailing stop to be set from a predetermined price?
Do you mean because you might want the trailing stop to be set while you are not at the computer to set it manually yourself ? If thats what you mean you would probably have to obtain, or write a script to modify order at a preditermined price to set the trailing stop.
To use a trailing stop you must first set a s/l where you normally would (protected by a point of support or resistance). If the market price goes into profit by the number or the size of your t/s it will move the s/l to the break even point (your entry price) and then continue to follow the market price by the number of points that you set when you set your t/s. The t/s will not reverse and go the other direction. If the market reverses it heads for that trailing stop. Trailing stops shouldn’t be used all the time. Only when going for enough points to make it worth it. When using a trailing stop the trading platform needs to stay running. How’s this description from someone who’s been at it for about 2 weeks?
Each trail turns into a hard stop on the brokers server. So, the trailing stop is actually putting in hard stops on your behalf. The trailing is done from your computer/client. So, if it disconnects there is no more trailing and the last stop stands.