Which one to prefer, trailing stop or take profit?

Question

Ryan · Accepted Answer

As a trader, you tell your broker in both a Stop Loss order and a Take Profit order when to close your trade.You can use a stop-loss to let your broker know how much you are willing to risk with your trade.The opposite is a take-profit. You tell your broker how much profit you are willing to make from one trade and close it once you are satisfied with the result. You can use stop loss and take profit options in the trading software you will be using with your brokerage. Almost every brokerage offers them. Nevertheless, if it does not, you should contact your service provider as the tool is very important.Stop loss and take profit orders may seem very easy to learn, but they are not. It takes months to learn about technical analysis. In this case, the trader looks at charts of different assets and uses formulas to determine when a currency pair will reach its peak price, and when it may decrease too much.Traders usually place stop-loss orders only at the beginning. They experience the market much more this way, even if they lose a bit for not placing take-profit orders.The fact remains that no matter how confident you are, a profitable position can go bad in a matter of seconds, and a small loss can turn into a large one in an instant. When trading, stop losses and take profits are unavoidable tools.

Anthony · Answer

Whenever you put on a trade, you should have a plan for all possible scenarios. It is best to have a high (profit) level at which to take profits, a low (loss) level at which to get out, and an amount of time in which to stay in the trade without hitting either level. The plan will usually be more complex and will depend on the speed of movements, volatility, movements in other markets, etc. But the point is that these are all plans that will be re-evaluated as circumstances change. Despite reaching your initial profit point, the trade may still be attractive to you. Stop losses are different. Stop losses are the maximum amount you are willing to lose if you are wrong (although you cannot guarantee that you won't exceed the maximum). Stop losses are not re-evaluated. You execute when you hit the stop button. Unlike plans, you can even use formal orders for it. Alternatively, a professional trader with a risk manager negotiates the stop with the risk manager and needs the risk manager's approval to change it. The trader can execute the original plan or not, as she sees fit. A stop is meant to ensure that you get out of a trade when you want to, not because you can't afford to lose more money.Trailing stops and take-profits is part of the plan, not risk management. My opinion is that they are rarely good plans. It's the kind of thing that appeals to gamblers, not traders.

Joel · Answer

1. A trailing stop is designed to lock in profits or limit losses as a trade moves favorably.2. Trailing stops only move if the price moves favorably. Once it moves to lock in a profit or reduce a loss, it does not move back in the other direction.3. A trailing stop is a stop order and has the additional option of being a limit order or a market order.4. One of the most important considerations for a trailing stop order is whether it will be a percentage or fixed-dollar amount and by how much it will trail the price.So, almost you will get an idea about the stop-loss and trailing stop-loss from these points and why trailing SL is more important than SL.

Which one to prefer, trailing stop or take profit?

6 Answer

6 Answer

Which one to prefer, trailing stop or take profit?

6 Answer

6 Answer

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