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Trailing Stops

 
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shipperschoice

Trailing Stops

Using stop loses is an important stradegy behind risk management. Trailing your stop loses can lead you to one of a few different results. 1st, the total lost you can afford to lose; 2nd, a smaller lose you can afford to lose in a better situation than the 1st; 3rd, a stop lose that can move into a profit position no matter how small or big.

If you can achieve a higher success rate of winning trades over losing trades, your result at the end of your trade day will almost always be profitable. The worst sinario is suffering a minor lose for the day. Which is better than a -5% lose for the day.

Sun, 03/24/2019 - 3:52pm
 
njeforex

I don't use trailing profitably.
I prefer moving my SL to breakeven and then profit in line to Support and Resistance.
When I trail SLs, most part of the time, pullbacks will hit the SLs and the trades will end as losses or just breackeven.

Maybe it's because I scalp.

 
wyu2009

I use a trailing stop for the majority of my orders. For long term trades, I set it to larger pip range to give the trade a chance to bounce back just in case it does not go the direction I anticipated. For short term scalping, I monitor the trailing stop very closely and usually move it up to a small profit point so I don't end up with a losing trade. I find that if I don't do the adjustment of the trailing stop, I ended up with more losing trades than winning trades because the trades will be stopped out easily.

 
jberry25

yes it has happened to me that the trailing stop gets hit in a trade due to retracement and I was wondering if they can allow us to set the trailing stop parameters? My way usually around getting stopped out early is applying the trailing stop once the trade is already in profit.

 
hdegraffe

I like using the trailing stop once the trade is in process. The use of the trailing stop does help in the risk as you established the profit in the stop loss especially at longer time frames such as 30 minutes to 1 hour

 
dshrp11

In both options and stock trading, I always use a stop. Stocks are nearly always a trailing stop. Option platforms usually require a hard stop. I see the value in manually moving stops as you move along, but I often see trades I have confidence in longer term and I do not wish to sit for extended periods in front of the computer. I am reluctant to have a trade moving along nicely only to reverse course and cascade back to a losing position just because I was not available. I may get stopped out early a few more times, but singles and doubles are still hits and I desire the protection more than striking out because I swung for the fences (or got caught looking).

 
mjdcomplaw

I usually don't start off with a trailing stop. Once my trade becomes profitable, I move my stop and let it trail. I like to limit my losses because big losses take longer to overcome more than small loses. My nature is such that I hate losses more than I love gains, or more accurately, I hate to lose gains because I did not move my stop loss before going to work.

 
hdegraffe

Thank you for the input. The more I trade and use various stop loss strategies, the better I get in the risk management strategies. I still have to work on the use of the trailing stop loss to insure my take profit. I hate the losses as well but it is better I experiment on multiple options and strategy techniques. Thank you for the response.

 
mkoningmd

I spent a bit of time working on automated strategies. I never found one that improved with trailing stops. My own trading has improved a lot by keeping my stop adequately far from the price action so that it rarely gets hit. I am much more likely to exit a losing trade manually, build a position and work the trade if I still believe in it, or hedge.

Just my 2 cents.

Good luck to all

 
burton

"I still have to work on the use of the trailing stop loss to insure my take profit." ...hdegraffe, i doubt you are going to find a universal stop technique.

my thoughts, are in line with jeff crystal...

when you have a high probability entry, one that will push in your direction, more often than not, then i would take multiple positions, closing out 2/3, or 3/4 of the positions in the first big push. then adjust my stop to allow the open position an opportunity to run.

side note: let's be real about the term "high probability", most traders do not consistently take high probability trades, as a result, they are left questioning trading techniques that actually work, when allowed to work. i know nothing of how you trade, i'm just sharing my observations, and understanding of the typical trader's source of difficulty.

there are at least two primary difficulties, when it comes to letting the price run...

1 - poor perception of trend...

the gbpnzd pair had a 2,240+ move, over 42 days (daily candles), from 2018.10.11 to 2018.12.11. during those 42 days, the following was true...

- multiple retracements of 150+ pips
- multiple retracements of 200+ pips
- multiple retracements of 300+ pips
- one single day move of 500+ pips
- one single day move of 400+ pips
- and multiple single day moves in excess of 200 pips

how many retail traders look at a 100 -200 pip move and see it as a market trend? ...as a result they are looking for a reversal.

side note: for me, as a hedge trader, my take on a 2,240+ pip move is going to be way different than the majority. it leaves me salivating, with anticipation. giving me inspiration, while fueling my passion to master my primary trading techniques.

2 - time, and need...

as a retail trader it is rare to approach the market in a way that a big investor would. meaning, big money does not move all of their money into the market at once, they build a position, and then ride the market. the big investor cares little about retracements.

example...

it is my understanding that syngapore has a trillion plus in assets that they actively manage, they maintain an undisclosed mixed basket of currencies. part of why they are so prosperous.

it wasn't always that way, syngapore use to have very usd driven strategy...this left them vulnerable to price movements they could not control, hence their change.

i know, i'm rambling a bit, and i'm doing so to share...

it's important for a trader to have both a short term approach, and a long term approach to managing their assets.

consider shawn, he wobbles for short term growth, and then relies on the apiary fund for long term growth. it is because of his long term approach that his short term profits are not a matter of survival.

once a trader can begin to build financial reserves, they then begin to trade, and manage their assets with a different state of mind. at this point, the trader then has the ability to employ stops, hedges, and other techniques with little attachment to a certain outcome.

meaning, the money is allowed to work. most retail trader do the opposite, they work the money.

as a result, there tends to be a disproportionate amount of struggle with such techniques as stops, back testing, while looking for profit, versus working to understand the bell curve of probability.

false hopes, false needs, and misplaced desperation are factors that commonly plague retail traders...they tend to be the source of so many low probability entries, and negative floats.

if a trader will spend more time focused on their reserves, and building an equity that allows them to live comfortably, they will then have the ability to remove the distraction of misplaced stress.

it's a bit like the trader that thrives in a demo account, and then struggles in a live account, or, to use apiary, it's like the trader that thrives all the way up to being funded, and then they blow up.

it's because the trader has not done the personal work to insure that they will have the ability to consistently trade the same way, regardless of the account, and or market pressures.

there is no mysterious, or magical trading method, there is simply a matter of consistency, and the obstacles that keep a trader from being consistent.

going back to the "stop loss"...

if you will pick one pair, one stop loss, and simply execute consistently, over 100, 200 or more trades, then and only then, can you really make a determination of what isn't working.

i could not be more serious, about any one part of trading, than what i just shared.

the vast majority of retail traders will not take the time that is required, or apply the consistency that is required, to mastering themselves, and how they trade.

when a trader is centered, in such a way, everything else is noise, there is no need to chase someone else's golden strategy. they simply work on self.

just stop and consider shawn's story...imagine, shawn, the trader you see today, curled up, filled with angst, in a corner, swearing off trading.

i know, this is long, so typical of me, i do get into a flow of thought, i really want to support the traders whom are working to understand, and improve their trading craft. hopefully, some of you will find value in what i shared.

trade calm, be kind to yourself, and do the work.

 
a.akki

It can be sometimes detrimental to set a trailing stop before a trade is well into profit. if a trade shows an initial profit and then pulls back, the effect of the trailing stop is that one can inadvertently shorten his original stop loss setting

 
zamzoftie

I always use a stop loss. In scalping I use a sl of about 35 pips. I sre this only in case something crazy happens as i intend to be out long before then.

 
jude.reardon

I cannot seem to get the automatic trailing stop to work for me. It seems the stop always gets hit before the stop moves into profitable territory. I guess it takes a little finesse to get it right.

I wish there was a such thing as a moving take profit, where the TP fell back with adverse price movements, but where the probability of hitting the TP while still in profit would as high as that of my moving SLs that always seem to get hit on the wrong side of breakeven.

For example, If you could set your TP at 100 pips, and then it traces back to positive 50 pips, and then it gets finally get hit by price action. Just a thought!

jr

 
burton

jude.reardon, i don't understand, in your trailing tp example, that is how the trailing stop works...

with a trailing stop, the stop will advance as the price moves in your favor.

with each move in your favor, a new stop loss is established, the new stop loss will not change if price moves against you.

how big of a trailing stop are you using?

 
billy.stagner

Quite intersting to me since I have never a used a "trailing stop".

 
jimgrahamiii

I prefer the trailing stop loss in less volatile situations, but I almost always have it on short term trades.