Trailing Stops

A stop loss is a system created to limit and reduce any losses at any position and manage the expected risk in currency trading . It acts like an insurance policy. It permits traders to set a limit to the most expected loss without setting a limit to the most expected profit.

A trailing stop will automatically change according to the market price when the position is positive by the amount of your trailing stop, added 1 pip to it.

In case of a long position and the market price is rising, the stop loss price will be affected proportionally. While in case of the price falling, the stop loss price will not change.

The advantage of setting up an automated trailing stop trading feature is that you don't have to monitor on consistent basis how your trade is doing. This is a useful advantage where you are not obliged to watch your trades for an extended period of time.

The stop loss disadvantage is that the stop price could be activated by a short-term price variation. This stop-loss permits the variation while preventing the maximum expected risk.

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