What are the FX Trailing Stop Methods?


Sep 29, 2021
Risk management and stop loss and take profit are the keys to whether a forex trader can make a profit; trailing stop, also known as trailing stop, is one of the ways to maximize profits and minimize risk.

Trailing Stop is a Stop Loss that sets a fixed number of pips in following the latest price change. When using Trailing Stop, you may close a position with a Stop Loss above or below the trigger signal, but if the price is moving in your favor, you can take advantage of the Trailing Stop for a greater profit.

Method 1: Breakeven point stop loss method

The breakeven point stop method is one of the simplest trailing stop methods. While waiting for the market to move in a direction you expect, you can set the stop loss at a breakeven point, and if the price reverses, you can automatically close the position without any loss.

Breakeven point stop loss can effectively protect your order from losses, but sometimes it also reduces profits due to early stop loss.

Method 2: Volatility point stop loss method

This is the most suitable stop-loss strategy for use in a strong trending market with significant volatility points.

When setting a trailing stop using trend swing points, forex traders can maximize the use of the trend profit until the trend ends and moves in the opposite direction.

It is important to note that using the above method for trailing stops, institutional investors will usually move the price above or below the current level before reversing. As the chart above shows, the price quickly reverses after moving above or below the main level. You need to keep this in mind when setting the Stop Loss zone.

Method 3: Support Resistance Stop Loss Method

This method is somewhat similar to the swing point stop loss method, except that the support resistance stop loss method does not need to take advantage of the trend.

When using key support or resistance levels to trail a stop loss, it is also possible to use key level prices to look for a breakout.

Source: https://www.forexrebateking.com/academy