Trailing stop loss is a trading strategy designed to help traders limit losses and protect gains during market volatility. It uses a preset order to place an order within a price range of a specific percentage of the market price, and it will take effect when the market reverses and pulls back after the market develops in a direction that the trader thinks is favorable. The feature of mobile take profit and stop loss is that it can automatically adjust the take profit price according to the market trend to lock in the profit or reduce the loss.
How is the trailing take profit and stop loss executed?
Trailing Take Profit and Stop Loss are only used to close existing positions. In the case of long positions, the activation price must be higher than the latest market price. When the latest market price triggers the activation price, the price of the mobile stop loss will increase by a specific percentage. As long as the price moves in the trader's favor, it keeps trades open and consistently profitable to lock in gains. Moving Take Profit Stop Loss will not move in the opposite direction.
For short trades, it must be confirmed that the activation price is lower than the latest market price. When the latest market price triggers the activation price, the mobile stop loss price will drop by a specific percentage. As long as the price moves in the trader's favor, it keeps trades open and consistently profitable to lock in gains. Moving Take Profit Stop Loss will not move in the opposite direction.
A mobile stop-profit stop-loss must meet two conditions, that is, satisfy the activation price trigger and reach the preset callback rate at the same time, before it can be executed as a market price order and sent to the market for transaction.
How to set up mobile stop loss?
Callback rate: The callback rate determines the specific price at which the mobile stop-loss price tracks the latest transaction price. Retracements typically range from 1% to 99%. Users can fill in and adjust the callback rate according to market conditions, or choose quick options, such as "5%", "10%" and so on.
Activation price: Users can fill in the activation price for triggering mobile stop loss or select the latest market price to trigger directly.
When setting a multi-position moving stop-loss order, the activation price must be higher than the current latest market price.
When setting a short position moving take profit stop loss closing order, the activation price must be lower than the current latest market price.
The market high/low price must meet or exceed the activation price to meet the trigger condition.
Triggering conditions: The transaction of moving stop profit and stop loss must meet the following two conditions at the same time.
Trading conditions for long-term moving take-profit and stop-loss closing: the activation price set by the market price trigger, and the callback rate ≥ setting.
Short order moving take profit stop loss closing transaction conditions: the activation price set by the market price trigger, the callback rate ≥ set.
Entrusted market price transaction:
Multi-position mobile take-profit and stop-loss liquidation: When the market price rises and then falls, and the fall rate is greater than or equal to the set callback rate, the order will be executed at the latest market price entrusted with the market price.
Short position mobile take profit and stop loss closing: When the market price rises after falling, and the rebound rate is greater than or equal to the set callback rate, the order will be executed according to the latest market price entrusted to the market price.
When setting a mobile stop loss, you need to pay attention to the following risks and precautions:
Market risk: Mobile take profit and stop loss cannot completely eliminate market risk, and market fluctuations may cause the stop profit condition to fail to trigger or trigger slippage.
Parameter setting: It is very important to choose the appropriate callback rate and activation price. If the setting is too small, it may lead to frequent triggers, and if the setting is too large, profit opportunities may be missed.
Black swan event: In extreme market conditions, trailing stop loss may not work because the market volatility is too violent.
Comprehensive consideration of stop loss strategy: Mobile stop loss should be an integral part of the overall trading strategy, rather than a single stop loss method. Combine with other stop loss strategies to establish a comprehensive risk management system.
Optimization strategy: Mobile stop loss is a flexible strategy tool, and its parameters need to be optimized according to different market conditions and personal risk tolerance.
Why use trailing take profit and stop loss:
Purpose: It is impossible to confirm where the highest or lowest price is, and it is impossible to ensure that the position will be closed at the highest/lowest point to make a profit. I want to achieve as much profit as possible while ensuring the profit.
Limitation: unable to watch the market 24 hours a day to make transactions.
Other advantages: Compared with the general stop profit and stop loss, after placing the order, the user does not need to frequently modify the stop profit and stop loss price according to the market situation in order to maximize the profit.
The operating rules of mobile stop loss?
If no activation price is set, it will be activated immediately when the order is placed
The activation price is based on the latest transaction price. When the activation price is triggered, the mobile stop loss will be activated
Close short: latest price ≥ trigger price
Flat long: latest price ≤ trigger price
Among them the trigger price calculation:
By retracement spread: minimum price + retracement spread;
According to the callback ratio: minimum price * (1+callback ratio)
By retracement spread: highest price - retracement spread;
According to the callback ratio: the highest price * (1-callback ratio)
Explanation of terms:
Pullback: Financial term, every time the price rises/falls, the price pulls back/back up slightly, corrects and rises/falls again.
Retracement rate: the ratio of the difference between the highest/lowest price and the current price
Long - the price drop from the highest point (highest - current) / highest
Short - the extent of price recovery from the lowest point (current-lowest)/lowest