Secure Your Trading Position with Stop Loss and Trailing Stop
Online brokers offer different types of orders created to protect their clients from huge losses. The most commonly used is Stop Loss. But you must know the order of this one is Trailing Stop. Surely you’ve heard it? You can secure your trading position with Stop Loss and Trailing Stop.
One often used by traders to limit the amount of losses from the pair price movement is the placement of stop loss orders. Using this type of order, you can adjust the loss of total losses that may occur. Stop loss orders are included in one type of pending order because they have not been realized in the market. This order will be realized if the bid or ask price passes the specified stop loss level. Once the stop loss is triggered it will be realized in the market to make your open position is liquidated. So you avoid bigger losses.
The trailing stop order gives you an edge as your stop loss becomes more flexible. This is an attractive alternative for traders because it allows traders to continue to protect funds from prices that move against the trader’s position.
When your position has shown profit then your trailing stop will be triggered so move your stop loss level to your open position level. It’s useless to protect the profit and capital that has been achieved.
To better understand trailing stop, we better use case example. For example, you buy EURUSD at 1.12500, place SL at 1.12000 and setup trailing stop 300 pips. So when EURUSD has moved to the 1.12800 level then your trailing stop is triggered so move your stop loss level to move to the 1.12500 level (your open position level). That way, the risk that was 500 pips is currently at zero risk because the SL level and your BUY level are the same.
Trailing stop can be setup manually and automatically. That means you can move your own stop loss level manually and can also use the trailing stop feature on MT4.
Well, you already understand how to secure your trading position with stop loss and trailing stop right? Happy Profit .. No More Big Loss.