Trailing stops is a technique to yield maximum return from a strong trend. Many strategies apply trailing stops as the exit strategy. Use this wisely and it can bring a lot of profit. However like other strategy this has pro and cons also. Let us look at how to use trailing stops.
Trailing stops is moving your stop lost after the price have move significant amount. This can ensure you are safe if the price decided to suddenly move back; in the same time can let you trail the price for maximum profit.
There might be different methods of setting stops; below is my method.
- The first stop depends on the strategy you use.
- When price move to significant amount and start consolidating, watch the price
- When price continue move along the trend, move the stop to the consolidating place
- I like to use the lowest level on the consolidating place add in spread and few pips
- Continue to do that when price move along
The photo below show how I perform trailing stops. I have removed the indicators to make the chart clearer.
Hope this will help you on your trading.
