فوركس ساتو

TRAILING STOPS
I have discussed trailing stops in my other eBooks, but because it is such an
important topic I’ll touch on it here once again. It is important to realize that
I’m talking about MANUALLY replacing your stops here in this section, but I
will also address the subject of an automatic stop here as well (which wasn’t
discussed previously).forex sato.forex changed life
Manually Trailing Stops
Some of your trades you will be employing a “limit order” to have a fixed exit
price for profits on your trades. For example, if you are using a Fibonacci
technique with a limit set at the 1.618 extension, or if you are doing a typical
“Forex Roulette” trade, then you don’t need to concern yourself with trailing
stops. However, if you DON’T have a predetermined exit point for a profit on
your trade then you would use a trailing stop approach.
The purpose of a trailing stop serves two purposes. It protects gains that you
have already captured through your trade so that if the market should happen
to reverse then you won’t risk those gains but rather your trade will be exited
at a profit. The second reason for using a manual trailing stop is so that your
trade may continue to run as far as the market moves, securing profits along
the way as discussed previously, but so that it becomes your strategy to
eventually exit the trade (since you don’t have a limit order to exit the trade
with).forex sato changed life
The general way to manually trail your stop is to monitor the trend on which
you are trading and to wait for a retracement in the market. You should by
now be well aware of the fact that the market moves in waves. After the
market has retraced setting a new low (for an up trend – conversely a new
high for a down trend) and has again extended past the peak of the wave
THEN you replace your stop price to the lowest price of the newly established
low (for an up trend – the high for a down trend).
By following the standard method of trailing your stops, as just described
above, will eventually result in your trade getting stopped out once the market
reverses. Here is a tip – Usually you’ll see signs that the market appears
likely to reverse (i.e. trend break), and you may trail your stops more
aggressively (how will depend on the specific nature of your trade) to
potentially get stopped out earlier for larger profits. The upside is that you
can leave with more profits, but the downside is you might get stopped out
before the market resumes the trend (simply look for another way to enter it in
that case).
Automatic Trailing Stops
Many brokers have added the ability to dynamically trail your stop through
their trading software. This means that you can set your stop order at the
initial price you would normally set your stop at and set a number of pips to
automatically trail your stop those many pips behind the market. For
example, you might choose to trail your stop by 112 pips (the usual daily
average move for EUR/USD). Please remember that this is just an example;
you may trail by however many pips seems logical to you for your particular
trade. Thus with a 112 pip automatic trailing stop as the market moves up 112
pips then your stop order will automatically be readjusted that many pips
trailing the market.forex sato
The nature of your trade will dictate to you by how many pips you want to
trail your stop by. You may trail by 10 pips, 50 pips, 137 pips, 492 pips, or
however many pips you want. The general idea is to trail by a loose amount;
you don’t want to trail too closely otherwise you’ll quickly get stopped out,
but conversely you don’t want to trail too far away either as you might miss
out on locking in substantial profits.
At the time of my writing this eBook brokers have only relatively recently
added the ability to automatically trail stops. I am working on cooking up
some specific trading strategies to maximize the function of auto trailing stops
but I’m still testing my theories & techniques, thus I won’t share them with
you yet.
In my personal opinion it is best to manually replace your stops as you’ll be
able to factor in market conditions but a mindless automatic trailing stop
can’t. If you are away from your computer and can’t monitor your trade then
use a loose (many pips away) automatic trailing stop, but be sure to readjust it
upon your return to your computer. Simply put, you just can’t beat the value
of having a human making the judgment calls for where to replace stops.
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