I have a problem in trailing the stop when the market moves vertically away from the trendline and i always fail to take significant profits at the end of the trade. So can you guys please help me in trailing the stops when there is a big move away from the trendline and moving averages.
trailing SL is like a double edge sword,
I dont use it but this is how i work which might help you:
what i generally do is i keep the SL away till it reache to a certain level then i close in the gap.
For example: if im long on stock @69 Rs for the first 2-3 rs i keep the SL @ 0.70pts and once it moved upto 71 i change the SL to 50pts and so on. Gpt the point?
Hope this technique helps you
Here are some ways one can trail stop losses. But do remember to have first a minimum target objective. Only after it is reached start trailing stop losses to cash in extra profit.
For any of the indicators below one can use Highs instead of Closes.
Initially use a slow moving (10-20 bars). Gradually decrease the MA period as the move becomes favorable - 20 --> 10 --> 5 --> 3.
Last 2-3 bars Lows/Closes.
High/Low/Close minus a multiple (.5/1/1.5) of ATR.
High/Low/Close minus certain percentage (.5/1)
Recent Swing Lows - trail as new Swing Lows are made.
For pros and cons of trailing SL check out -
If you find yourself with a good entry at the beginning of a big rally, Parabolic SAR provides a very good trailing Stop Loss. I will usually stay in the trade until two red Heikin Ashi candles are formed in the up move.
Could you please clarify?
Buy @ 69,
For first 2-3 rupees, you mean until 72, you keep at 0.7 pts (simply 0.7 or 69-0.7=68.3 which one?
Moved up to 71, you mean 69 to 71, moved 2 points up, you change stop loss to 50, why? (For a stock at 69 rupees, stop loss of 50 may not occur in that day, i think. Then why do you set stop loss at 50?
fantsatic Ajay, please become active once again, I am easily able to resonate with all your comments as they are of top class and easy to understand.