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Mt4 trailing stops. Someone please help!!

Discussion in 'General Forex Talk' started by Princepessa, Mar 13, 2009.

  1. Princepessa

    Princepessa Private

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    Could someone please enlighten me. I thought trailing stops were designed to help you lock in profits..when you set a trailing stop of x pips, as soon as the market moves x pips in your favor, your stop kicks in (at least that's how I understand trailing stops).

    I have been demo trading with Alpari UK for the last week and I noticed that whenever I set a trailing stop, I get stopped out of the trade at a different point...for example, on one trade, I set a trailing stop of 30 pips, and I got stopped out of that trade with 23 pips. On another trade, set a trailing stop of 50 pips and got stopped out with 42 pips. On yet another, set a trailing stop of 30 pips and got stopped out with 6 pips e.t.c.

    Now I don't understand, am I doing something wrong or is it the broker or is there something about trailing stops that I don't understand?
     
  2. tingtong

    tingtong Private

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    when price moves to your favour, trailing stops keeps moving up as well, keeping the distance between your stop and the price, say to 30 pips, if that what you set.
    say, price moved 20 pips to your favour, then SL is now 10 pips bellow your entry....
    but when price moves against you, stop loss stays there....so, now if price falls 30 pips, you will be stopped out.
    thus you find a 10 pips loss this case.
     
  3. Mr Ian Mallett

    Mr Ian Mallett Recruit

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    Tingtong is not quite right in his explanation.
    The trailing stop should not kick in untill later.
    For instance if you put a 30 pip trailing stop, once the market moves to a position that your trade is 30 pips up, the trailing stop will kick in, thus moving your Stop Loss to the point you made the trade. So if the market drops back 30 pips your trade will close losing you nothing but making nothing. However if the market were to move another 10 pips in your favour, putting your trade 40 pips up, your Stop loss would now be at 10 pips.

    In your first example, your trade must have been 53 pips in your favour at one point, your trailing stop would move your Stop loss to 53-30 = 23 pips.

    Hope this helps.
    Ian.
     
  4. tingtong

    tingtong Private

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    you are right!
    thx for correcting, i meant the same thing, but used the wrong number with 20 pips to explain the method.
     

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