For most new traders, the main concern is that they can “cope” with market changes in a short period of time (without sufficient trading experience), and that they are easy to understand and practice.
In this post, Forexpress will share a profit-locking strategy from Trailing Stop: 2-day high/low from renowned overseas trading mentor Richard Krivo.
What is a moving stop loss in trading, any indicator, data, trading method is a double-edged sword.
We need to see not only the good things about them, but also the bad things.
With the growth of electronic networks, more than 80% of trades are now automated, and “mobile stop-loss” on the MT4 platform is one of the tools used to automatically manage account risk.
A “moving stop loss”, also known as a “trailing stop loss” or “trailing stop loss”, is a stop loss that follows the latest currency price by a certain number of points and is triggered only when the exchange rate moves in a favorable direction for the position.
The main function of moving stop loss is to automatically maintain the position held in foreign exchange trading and automatically change the stop loss level according to the price changes.
The moving stop setting on the MT4 platform uses EURUSD as an example, if the trader enters the long position at 1.1100 and sets the moving stop 50 points below the entry level, i.e. 1.1050.
If the exchange rate continues to rise, the moving stop automatically follows and maintains a 50-point gap from the current price.
This means that if the price hits 1.2200, the moving stop will automatically set at 1.2150.
On the contrary, if you open a short order, the move stop loss behavior is completely opposite.
Traders set it at a number of points above the entry level.
The drop in price causes the moving stop to move by a set number of points.
Price rises, moving stop loss does not move.
If the market is going well and the trend is strong, the trader will regret cutting his profit too early.
In this case, a moving stop loss is a useful tool to maximize the trader’s profits.
Moving Stop: The 2-day high/low strategy lets us assume a slow downside move on the daily chart to short EUR/GBP based on a random indicator cross.
The two candles in the box represent our chosen stop loss area.
When shorting, we can place a stop above either of the two wicks because it represents a two-day high.
In this case, the stop loss will be placed above the wick where we see the black line.
As the day moves to the next trading day, so does the candle in our box.
As we can see in the chart below, the two-day highs remain unchanged, so our stops are not moving either.
In the next chart, as we move into the next trading day, the candle in the box will also move forward one more.
Trend traders use it, but it is impossible to keep track of price changes.
Moving stops should also be used in day trading when a quick reaction to price changes is required.
In the end, you have to remember one thing: regardless of automated trading tools or your “gut”, financial markets are still a game of few possibilities that offer no sure recipe for success.
