Forex trading with trailing stop
Many traders have heard of the truism, 'cut your losses short, and let your profits run.' However, if you are unfamiliar with a tool to help you implement this tried and true wisdom, it's time you familiarize yourself with the trailing stop. If you've never heard of a trailing stop, it's just like a regular stop order, except you can set it to move along with the market.
Forex Trading Trailing Stop Strategy Example
Here is an example, let's say that you want to go long on EUR/USD, and you set an emergency stop that will be triggered if the market ultimately moves against you. After a day or so, the trade is completely in your favor, so you want to lock in some profit and see what happens. You could set a stop in positive profit territory, and make it a trailing stop. If the market continues to move in your favor, your profit lock will increase. That will continue to happen until the market flips back in the other direction and hits your stop.
The primary function of the trailing stop is to increase your profit lock as the market moves, without the need for you to intervene and adjust. The trailing stop functionality allows you to follow trends based on your comfort level. You don't have to monitor the trade constantly.
Another good example of how to use a trailing stop is for trading stop longer terms. You set your initial stop far away from the market and just allow things to develop. It works well for slow trading systems that lock in profit over months and days. I prefer to set a long-term target, and also have a trailing stop. It allows you to set up your entire trade early on and allow it to run its course.
The forex market runs 24 hours, six days a week. It is a fair amount of hours to monitor. Rather than getting no sleep and broken sleep, it makes better sense to set a trailing stop on your trade. The big benefit is that your profit lock increases while you sleep. The market will always do what it will do, and your trade will adjust itself or stop out.
Many traders have heard of the truism, 'cut your losses short, and let your profits run.' However, if you are unfamiliar with a tool to help you implement this tried and true wisdom, it's time you familiarize yourself with the trailing stop. If you've never heard of a trailing stop, it's just like a regular stop order, except you can set it to move along with the market.
Forex Trading Trailing Stop Strategy Example
Here is an example, let's say that you want to go long on EUR/USD, and you set an emergency stop that will be triggered if the market ultimately moves against you. After a day or so, the trade is completely in your favor, so you want to lock in some profit and see what happens. You could set a stop in positive profit territory, and make it a trailing stop. If the market continues to move in your favor, your profit lock will increase. That will continue to happen until the market flips back in the other direction and hits your stop.
The primary function of the trailing stop is to increase your profit lock as the market moves, without the need for you to intervene and adjust. The trailing stop functionality allows you to follow trends based on your comfort level. You don't have to monitor the trade constantly.
Another good example of how to use a trailing stop is for trading stop longer terms. You set your initial stop far away from the market and just allow things to develop. It works well for slow trading systems that lock in profit over months and days. I prefer to set a long-term target, and also have a trailing stop. It allows you to set up your entire trade early on and allow it to run its course.
The forex market runs 24 hours, six days a week. It is a fair amount of hours to monitor. Rather than getting no sleep and broken sleep, it makes better sense to set a trailing stop on your trade. The big benefit is that your profit lock increases while you sleep. The market will always do what it will do, and your trade will adjust itself or stop out.
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