Understanding Trailing Stop Loss

Hello,

TP: 50 pips (Price 1.150)
Entry Price: 1.100
SL: 100 pips (Price 1.000)
Trailing: 10 pips

Condition 1:

Let’s say the market is moving above the entry price by 15 pips; then, due to Trailing “10,” the new Stop Loss will be at Price 1.090 (10 pips above the original stop loss).

Condition 2:

Let’s say the market is moving above the entry price by 15 pips; then, due to Trailing “10,” the new Stop Loss will be at Price 1.110 (10 pips above the entry price).

Which condition is correct?

Neither.

As soon as market moves in your favour the stop will be 10 pips behind the “high water mark’ of the trade.

Price reaches high water mark of 15 pips profit and trailing stop will be 10 pips behind the high water mark at 5 pips profit.

1 Like

Ohhh, I got it.

Means if i set Trailing 1 pips and market move 10 pips in my favor that means from the highest point it will set new stop loss High point of that particular - 1 pips.

Correct

1 Like

In the example, you say that 100 pips is the difference between 1.1000 and 1.0000. this difference is actually 1,000 pips.

2 Likes

My Mistake

So, Trailing Stop means:

If the Current Price is greater than the Entry Price, and if the difference between the Current Price and the Entry Price is greater than the Trailing Stop, then it sets a new Stop Loss with a value of Current Highest Price minus the Trailing Stop.

``````1. Condition: If the current price is greater than the entry price.
2. Condition: If the difference between the current price and the entry price is greater than the trailing stop value.
3. Action: Set a new stop loss level at the current highest price minus the trailing stop value.
4. Additional Condition(favorable direction): If the difference between the new stop loss level and the current price is greater than the trailing stop value.
5. Additional Action (favorable direction): Set a new stop loss level at the current price minus the trailing stop value.
``````

Is that correct?

Looks like you have the understanding now.
As the name implies the stop loss trails the highest high (or lowest low) by the value determined in the settings.

1 Like