You should assume what is it just by judging with it’s name and that’s really it. So please do work with that. It’s the point where you stop losing actually and you should set it. Like some people already suggest you really need to play with demo account first.
I read such info:
A Trailing Stop Loss is a Stop order that can be set at a defined percentage away from a pair’s current market price.
It is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in the user’s favor but to close the trade if the price changes direction by a specified percentage deviation. That function allows users to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain.
I would argue with the "defined percentage. Too me, it’s pips. Then I adjust trade size to equal no more then a 1-2 percent loss of my TOTAL account. Think there is a difference?
Ok so a trailing stop loss is the same as a stop loss?
Basically what we’re doing is setting the lowest level we’re prepared out trade to go BUT it doesnt close the trade nor does it stop the profits unless we have a Take profit amount built in. Have i got it right?
A stop loss is set when the order is placed(by most). When/if the price goes in your direction you can move the stop loss higher/lower or decide to “trail” a stop up/down, like a 10 pip trailing stop. Many platforms allow you to set a trailing stop.
Setting the stop loss does not close the trade unless price goes up/down and meets it. It has nothing to do
with whether you have a take profit built in or not.
Placing a stop loss is like creating a robot that will take an action once a price hits a certain level. Your “robot” will be awake 24/6
Say you buy one stock of AAPL at 100 dollars and place a stop-loss at 90 dollars.
If price ever falls below 90 the “robot” will automatically sell you order ensuring that you only loose 10 dollars.
**If they is high volume trading e.g following a scandal, it might take a while for the broker to execute the order so your loss might be 15 instead of 10. Also it is recommended to choose a reputable broker as they have the most robust IT infrastructure so can execute orders quicker and most consistently than smaller or less known companies.
Stop losses are free of charge. However some brokers give the option of a guaranteed stop loss orders for a fee.
Thank you for your response it all helps
Ok thanks. So if i place a trade and i want to reduce loss i can put my lowest value in stop loss box so that if the trade doesnt go to profit then at least i can control my loss. Eg i can set it just a few pips below the purchase price thus it will keep options open for when it hopefully changes to profit.
Click “Start Course” !
Come back and ask about “stuff” when you have gone through the course
That would be really great; I am sure you’ll get tons of solutions in there! All the best!
Once you get more comfortable with stop losses and want to look at expert advisors, you might want to take a look at an EA for MT4 that will automatically manage your stop loss and move it into profit based on levels you set up. The way it works is you set up your initial take profit and initial stop loss. Then you set up to 4 take profit levels (based on percentage). When the price hits one of those take profit levels, the stop loss will automatically move to the last level. And so on until your 100% take profit is hit (then a trailing stop will enable).
For example, using round numbers. Say you have a final take profit of 100 pips. You can set up 4 take profit levels of 25%, 50%, 75%, and say 80%. When the price hits 25%, then the Stop Loss can move to 12.5% (whatever you set). When price hits 50%, the stop loss will move to 25%. When price goes to 75%, stop loss will go to 50%. And so on. Then if your 100% take profit is hit, the EA will do a trailing stop indefinitely.
This will lock in your profits. I use the EA and it works great so far. I had been looking for one like this because I wanted to simplify and maximize my stop losses while maintaining profit. So I thought I’d pass it on.