Problem with dynamic trailing Stop Loss

[asimpleplan]

As many on here know I'm working on a intraday price action strategy based on short term trends.

Knowing what type of Stop to use is obviously important.

AFAIK, FXCM only offers a minimum of a 10 pip SL.

The problem with the dynamic trailing SL is obviously the intraminute whipsawing. Given the amount of whipsawing there is in price formation, it's clear a DTSL will be triggered sooner than one desires.

Imagine on a 5 min chart, it'd probably only take 2-3 candlesticks for the whipsawing to trigger the SL.

OTOH, a fixed 10 pip trailing SL will keep one in the trade for longer but leave room for the trade to move against you without the SL being triggered.

So, with the DTSL, the SL will trigger after the trade has moved 10 pips in my favour AND then, after the 10 pip gain, the stop will be triggered as soon as the price moves 1 pip down i.e. the price could move many more pips in favour before the SL is triggered.

 

[forker]

The thing is when you trading at that time frame there is no silver bullet. Sometimes it will work, other times it won't and you have no idea to know when a scenario applies. This is one of the biggest issues that chew away at profits when trading for small gains. My suggestion is stop worrying with specifics of perfection and try find something that works enough of the time to balance profits more than losses. I gave up on this year's ago because it was difficult to find a consistent process and I ended up more or less break even.

 

[asimpleplan]

My suggestion is stop worrying with specifics of perfection and try find something that works enough of the time to balance profits more than losses. I gave up on this year's ago because it was difficult to find a consistent process and I ended up more or less break even.

Are you saying to forget about the short term intraday time frame or to focus more on longer term 'swings'?

 

[forker]

I'm saying in my experience of trying to work out stops, it becomes increasingly difficult to optimise stops in order to gain more profit. I found it more profitable to trade with a standard stop when trading fundamentally. Both short term and long term.

 

[Jason Rogers]

As many on here know I'm working on a intraday price action strategy based on short term trends.

Knowing what type of Stop to use is obviously important.

AFAIK, FXCM only offers a minimum of a 10 pip SL.

The problem with the dynamic trailing SL is obviously the intraminute whipsawing. Given the amount of whipsawing there is in price formation, it's clear a DTSL will be triggered sooner than one desires.

Imagine on a 5 min chart, it'd probably only take 2-3 candlesticks for the whipsawing to trigger the SL.

OTOH, a fixed 10 pip trailing SL will keep one in the trade for longer but leave room for the trade to move against you without the SL being triggered.

So, with the DTSL, the SL will trigger after the trade has moved 10 pips in my favour AND then, after the 10 pip gain, the stop will be triggered as soon as the price moves 1 pip down i.e. the price could move many more pips in favour before the SL is triggered.

Hi Asimpleplan,

As you've pointed out, the minimum stop move for the fixed trailing stop on FXCM's Trading Station platform is 10 pips. If your strategy requires a smaller stop move distance for a fixed trailing stop, then you can program this yourself and have it programmed as a custom strategy for Trading Station, MT4 or NinjaTrader.

However, you may find you run into the same problem with whipsawing you encountered with the dynamic trailing stop on Trading Station which has a stop move distance of 0.1 pips. For this reason, I'm inclined to agree with Forker that you may be better off for
short term trades using a simple stop order instead of one that trails.

 

[SmartGeek]

I dont use trailing stop because it easily to hit and close my trade. Stop loss is very importent system for trader. When we cannot still market than this stop loss menue can save our account. So i always use it with my calculation of trade.

Yeah...! I too use Stop Loss, It is a good strategy to trade with Forex. It can come in handy if we have done proper market analysis, else it would be another way to lose our money.

 

[NVP]

Stops is a science in itself and more important than entry in many ways

Most newbie/intermediates are killed by this and leave trading broke because of it .....not necessarily due to poor entries ......you get bled at both ends of the game in trading

You have to find what's comfortable basically......and you will give a lot,back whatever you chose.....my advice is to be very clear on the relationship between entries and exits......as if you do get bumped out early on a decent trade then why didn't you re-enter if the new move was so,good ?

N