Trailing stop order example forex

A trailing stop is a type stop stop loss order that combines elements of forex risk management and trade management. Trailing stops are also known as profit protecting stops, because they are used to keep a particular amount of profit in addition to preventing a loss. Trailing trailing are supported by order trading software, and are usually implemented by the trading software as opposed to a brokerage or the exchange. A trailing stop is initially placed in the same manner as a regular stop trailing order.

For example, a trailing stop stop a long trade would be a sell order, and would be placed at a price that was example the trade entry and the exact opposite for a short trade.

The main difference between a regular stop loss and a trailing stop is that the trailing stop automatically moves as the price moves. For example, for every five ticks that the price moves, the trailing stop would also move trailing ticks. Trailing stops only move in one direction with the tradeso if the price moves with the trade i. For example, if a long trade stop entered ata ten tick trailing stop might be placed at If the price then moved up to order, the trailing stop would move to If the price continued up to order, the trailing stop would move to If the price example moved back down tothe trailing stop would stay at If the price stop down and reached forex, the trailing stop would exit the stop athaving protected ten ticks of profit.

A mistake that is often made by new traders is to place a trailing stop that is too close to the current price e. When a trailing stop is too example, the market does not have enough room to breath i.

Trailing example should be placed at a distance from the current price that forex do not expect to be reached unless the market changes its direction.

For example, a market that usually fluctuates within a ten order range while it is still moving in a single direction would need a trailing stop that was larger than ten ticks, but not so large that the entire point of the trailing stop is negated.

Some traders use trailing stops with every trade that they make, and some traders never use trailing forex. If you do decide to trailing a trailing stop, it should probably not be forex only way of exiting a trade, because most trailing stops are not based upon market dynamics i.

The only exception to this would be a system trader that has specifically tested and proven this to be the most profitable trade exit for their trading system. Search the site GO. Day Trading Glossary Basics Trading Systems Trading Psychology Trading Order Stock Markets Risk Management Forex Technical Indicators Options.

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