Treyling of feet
Everyone is familiar with the situation when the deal closes under TR, but the price then passes more than a dozen points in a profitable direction depriving you of part of the profit. The trailer stop allows this problem to be solved and squeezed out of each deal all to the last point.
Today we will sort it out step by step:
As treyling-stop works;
When it is better to use a trailer stop;
Types of treyling-stop;
Opening any warrant on the market implies that sooner or later it will be closed. In the general understanding there are only two options - closing on a teak-profit or on a stop loss. And if everything is relatively clear with the teak - it is installed in the place of the supposed reversal, here with a foot far from so unambiguous. The main purpose of the stop is to prevent the loss from growing, so it is useful to use it in absolutely every transaction, especially if a significant amount of funds is used as a percentage of the total amount. Otherwise there will be a forced stop-out, or as it is common to say in the environment of traders, Uncle Kolya will come (from the word margin-call). That is, when entering the deal, it is supposed to hold the position until one of the two closing warrants - teak or stop - works.
In positional trade, this approach is quite justified, as the goals are set solid, usually fundamentally justified. Therefore, the departure of the price in minus by a hundred or two points will not worry anyone, just like the reversal of the price, near the target and the beginning of consolidation. Tactics imply working from and to, without fuss. But not all will agree to this type of trade, because the income will be very small compared to the deposit, conservative trading methods are suitable for those who have a very large balance sheet and have the opportunity to survive the drawdown, and the received 20-30% of the deposit per year is a large and sufficient amount. And what about being the one who wants to pick up as much as possible from each hour 's wobble? The answer is simple - to use a stop trailer.
The use of foot trailer makes it possible to make the most of the market movement. Essentially, it 's a floating stop that follows the price, pulled up with every new turn of movement. Let 's look at a specific example - buying EUR/USD at the price of 1.5000 and then setting up a 20-point foot trailer. Nothing will happen if you move down. If the pair starts moving in the right direction, then when we reach 1.5020, our stop trailer turns on. It is at this point in time that the loss limit will automatically be set at 1.5000, that is, 20 points away, as indicated when it was installed. If the price passes further to 1.5025, the level of foot trailer will move by 5 points to 1.5005.
That is, after a configurable number of points is passed, a stop script trailer is activated, which moves the stop according to the new local price extremes, and until then the number of points set when the stop trailer is turned on will act as a normal stop. The trailer stop records the current maximum on our eurodollar and every time this maximum is updated, the stop is tightened so that the distance between this maximum and the resulting stop is still the same specified in the twenty-point settings.
In what situations it is convenient to use stop trailer
There is not always an opportunity to accompany the deal. Sometimes even just periodically looking at the situation is impossible. In case you do not set the trailer stop, and the target was slightly further than the place of trend reversal, it is rather unreasonable to leave the deal and wait for the planned value to be achieved. A typical situation is the formation of a pin bar in the middle of an active and hopeful trend. In more than 60% of cases, consolidation or rollback follows. Accordingly, trailer stops in such a situation will be simply irreplaceable. It will work when the rollback exceeds its value. This is not as effective as with full manual control, but much better than missed reversal and profit reduction. It can be said that the stop trailer acts as some compromise between too much time spent but high efficiency and a lack of attention to a deal with potential lost returns.
Also trailer stop is very convenient in trading channels. This phenomenon is not so frequent, but long-playing even by the standards of small time frames. The method of automated position tracking in such a situation can make it possible to divert to other instruments, because in normal trade, that in case of foot trailer, the exit from the position takes place on the break of the trend generatrix of the channel, until then the continuation of the movement remains in priority.
Determination of the size of stop
Size of the foot trailer depending on the time frame used. A common method of some averaged values for different scale movements. Thus, for minute or five-minute oscillations similar technique is not used, but for М30 on pound pairs the minimum possible for trailer foot in metatraider 15 points are quite suitable. Further on increasing - hourly trends can give kickbacks and in 20-25 points, four-hour are adjusted already by 40-60, daily by 80-150. Of course, everything depends on the particular pair, the values presented are well suited for the trailer foot on the eurodollar. For Australian and New Zealand dollars, you can take values reduced by one and a half times. But for couples with the British pound, the stop trailer should be used neatly and oriented to a size one and a half times that for the eurodollar.
Size is determined by fibonacci ratios. A relevant and reasonable way to estimate the scope and magnitude at the points of possible rollback and, on the basis of this, to provide a trailer stop. For example, there is a movement of 100 points. The rollback in the original form will be from 15 to 25 points, it is an area of the first fibroids - a good option to transfer these values to the trailer stops, it is from it usually repels the price when gradually growing or falling. So in intraday weekly trading system, you can navigate these values to set up a stop trailer. If the rollback scale increases, 38.2% may be the next target. This is a strong enough level, which on trend movement occurs, not so often, but still happens. Provides quite strong price support, so you can clean up the trailer stop for it. Rather, to set it at such a distance that the possible rollback is earlier to rest on the fibrolevel than worked calculated according to such a technique trailer stops.
The moving average as a reference for setting up a trailer foot. This method is suitable for medium-term trading on confident time frame trends of at least Н4. The moving average indicator is superimposed with a period of 24 to 32 depending on the volatility of the instrument. Once the muwing and schedule start going parallel courses, you can set up a stop trailer. The value is taken equal to the distance obtained by dividing by two sums of distances at points of maximum point of diagram removal from the line and point of maximum approach. That is, the average distance from the graph to the mooving is taken as the main parameter of the foot trailer. It is proved by that. That often such sliding act as dynamic support and the price from them is repulsed. After the appearance of a new extremum on the chart and, as a result, pulling the trailer foot closer, the price will be adjusted for some time, and by this moment the indicator will be able to approach the price and again leave our floating stop safe. Such a method allows to turn on the stop trailer and hold the position for a very long time, at the same time the actuation of such a profite foot will take place at the moment of a real trend change confirmed by the break of this moving average.
Advantages of Using Foot Trailer
Once set, when the warrant is opened, it makes it possible to forget the position after the price has gone to the right number of points to activate the foot trailer. If business is done on a set of tools, then it very much and very convenient scheme of control of positions. Unlike the classic stop loss, it is about maximizing profits even when there has been a reversal and the price goes against the trader. That, already passed, is the number of points minus the stops spent on the trailer and will be the total profit. So it is safe to identify this method as optimizing trade.
The undeniable benefit of using a function such as stop trailer can be seen in sharp minute fluctuations, which have recently become not uncommon. And it 's not about twenty points, it 's about a hundred. For example, to use stop-tracking in the market, when the situation with the UK leaving the European Union has led to every comment about a successful or, on the contrary, unsuccessful round of negotiations on a further trade agreement gives a sharp jump in the price of the pound relative to the dollar, and other currencies too. Already in just thirty seconds, more information or rebuttal may come in, and the price flies back. The trailer stop operates much faster than the manual transfer of the foot to the required level, as it operates by means of a script sending a signal to the broker server. Even with trade included in one click, the script still overtakes the person in such dynamic fluctuations. Also a good example, when the stop trailer helps, is trading on publications on the US labor market every first Friday of the month, solutions on interest rates in countries with popular currencies among traders, data on GDP of various regions, in general, all volatile news. It is enough to understand the likely direction of movement in accordance with forecasts and the general trend, to turn on stop trailer and observe.
Shortcomings stop treyling
The most important thing is that you need a permanent internet connection and an enabled terminal. The trailer stop is constantly updated as the price of each item progresses, so there is a constant sending of data to the broker 's server. A link break will leave the last value until the connection is restored. That is, in this case, the stop trailer turns into a normal static, as there is no signal of its movement.
Getting rid of the need to monitor price promotion on the trend is compensated by working with orders for the future. Pending orders will work with the settings you set when you install them. That is, only after the price advances in the right direction and these warrants work can you set up a stop trailer for them. It turns out that by removing one manual function, we add another, but here to whom it is more convenient and more convenient.
Such a method of accompanying the deal trailer stop has very weak performance in movements accompanied by significant kickbacks followed by updating of extremes and new kickbacks. They are not found in the market as often, but still they account for a certain share of impulse movements. The incorrectly chosen size and trailer stop will work too early, if taken with stock, then it is easier to use the usual, stationary. Like any other tool, this gives the advantages of application in certain situations, but is completely useless in others. Therefore, before deciding to include a trailer foot, first it is necessary to assess the market situation and weigh everything for and against, it may turn out that it will only hurt.
Automated Solution for Using Foot Trailer
It is not surprising that such a useful function over time decided to shift to program code and make an adviser working on the same principle, but devoid of some shortcomings of the classic solution from the terminal. TrailinRobot is an upgraded trailer foot. The robot is designed by a rather famous person - Margarita Lasker. Interesting features include the following:
Control of a step. A feature that was so lacking in a metatraider 's trailer foot. The point is that every change in the foot does not occur at the moment when the price extremum is updated, but at certain intervals. Let 's say with a set step of 10 points, as the price moves in the right direction, the stop trailer will only work when the new 10 points are passed. And until then, the old level will work. This allows you to normally practice movements with quite serious and numerous kickbacks without turning off the stop trailer.
Ability to work with all warrants. This is an unconditional plus for those who practice weekly trading system on deferred warrants. The councillor will run and set up a stop trailer for all warrants, not just those opened by hand. This allows multiple warrant grids to be applied across multiple instruments, with no need to monitor each of them (especially if the distance between them is 5-10 points). Trailer stop in combination with some types of scripts to install no-break makes it easier to work with trend pyramids.
Splitting a Position Using a Foot Trailer
One popular method of diversifying positions by goal is the included stop trailer with different parameters on each divided work lot. That is, the usual entrance is divided into several parts and each of them is given its value of teak and launched according to the strategy of either standard or automated trailer stop. As a result, it turns out that some positions will close quite quickly due to serious restrictions on the permissible rollback, the rest will move together with the price, closing as the rollback ranges increase or the goal is achieved. Trailer stop in this form helps optimize profits when the market is dynamic and there is no way to constantly monitor it, and you do not want to miss the movement.
Effectiveness stop treyling
Fairly good and statistically confirmed results show the use of a treading foot in medium-term trade on the four-hour period of the main currency pairs, and also, not surprisingly, its application on scalper strategies in trading a pair of pound-yen. It is a very volatile trading tool, which, however, gives the opportunity to make steady money on its dynamics. Particularly well the stop trailer works after long consolidation, after which there is a break in range and the price starts to move rapidly. These are usually periods of pound rise to all and yen decline to all, or vice versa. Even the conservative value of the parameters of a set trailer foot can help take a major movement.