Trailing Stop Percentage

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Trailing Stop - Percentage

Trailing Stop levels are used by traders to determine when to enter or exit a trade.

Trailing Stops can be used to limit losses, or to maximize profits.

Your SOFTWARE's Trailing Stop - Percentage indicator automatically calculates stop levels using a user defined percentage change of the base symbol's daily (or other interval) price.

A trailing stop is incrementally changed to follow the direction of the current trading price. From the start date, forward until the stop level intersects the price chart, the trailing stop levels will only change in one direction: Upward for Long trades, downward for Short trades.

indictrailingstopprecntg.gif

The stop level calculation is performed daily. If the calculated stop level is higher than the previous day's (for a Long market setting), the new level will be plotted on the chart below the current interval. If the stop level is lower than, or the same as, the previous day's level, the result will be discarded and the previous day's level will be continued horizontally to the right.

In the Short stops setting the process is reversed - i.e. stop levels must be less than the previous day's level in order to be plotted.

In this way, the stop levels can only progress either upward (in Long markets), or downward (in Short markets).

The point at which the trailing stop line intersects with the price chart is the exit or entry signal point.

Percentage Calculation

Users can choose the price data type to be used in the Price calculation in the Add/Subtract Using setting of the indicator's Parameters box, see below for details.

Users can choose between Close, Open or High for Short settings/Low for Long settings.

Regardless of the price data type chosen, the stop calculation will be made between the current price and the price level on which the current Stop level was calculated.

If the price level stayed the same or decreased for a long setting (or stayed the same or increased for a short setting) the stop would not be moved and the current level of the Stop will be continued for the current interval.

If there was an increase (Long setting)/decrease (Short setting), the plot would be increased/decreased by the amount calculated using the user defined percentage of the current price, and then added or subtracted to the current stop according to the Add/Subtract Using settings and plotted.

Whenever the Stop level intersects anywhere with the chart, regardless of the price data type selected in the Add/Subtract Using settings, the stop will be triggered and the plot will stop.

Parameters

The following Trailing Stop calculation variables can be set on the Parameters tabbed page of the Trailing Stop - Percentage Properties dialog box:

indictrailingstoppercntparm.png

Initial Position

Select between Long or Short, depending on what type of trade is contemplated.

The Trailing Stop display will always be plotted below the price chart for long stops, and above the price chart for short stops.

Entry Date

Select a date from which the Trailing Stop indicator will proceed.

Type in the date using the dd/mm/YYYY format or use the convenient drop down calendar selector tool.

Note - For Long trades, the Entry Date must be followed by a price rise on the subsequent day for any plot to be made. Likewise, for Short trades the Entry Date must be followed by a price decline.

Add/Subtract Using

Select the price data type used to calculate the amount by which the current level should be added to (for Long markets) or subtracted from (for Short markets).

For a long setting, if Close is selected the current Close price will be compared with the Close price at which the stop was last raised.

If the price has raised, the current Close price, less an amount equal to the Percentage set, will be plotted as the new stop level.

For short settings, the comparison will be with the Close price at which the stop was last lowered, and if there was a decrease the current Close price, plus an amount equal to the Percentage set, will be plotted as the new stop level.

The Open setting works in an identical manner, except the above Close prices are the Open prices.

The High/Low setting is different.

If the Long setting is chosen in the Initial Position setting, see above, the calculations and plotting will be referenced off the current interval's Low price.

If the Short setting is chosen in the Initial Position setting, see above, the calculations and plotting will be referenced off the current interval's High price.

Percentage

The resulting levels can be plotted at different percentages of the current price.

In volatile markets the percentage can be increased to move the stop levels further from the price chart, thereby avoiding premature triggering of the trailing stop.

Display

As mentioned previously, the Trailing Stop display will always be below the price chart for long stops, and above the price chart for short stops.

The exact display of the plot is controlled on the Plot tabbed page of the Trailing Stops Properties dialog box.

Style

The display Style selected for the plot can be one of the following: Solid, Dashes, Dots, Points, Histogram or Step.

The default setting is a dotted line (Dots). Note that the graphic in this topic (see above) is a Step plot.

Once the display style is selected the Color, Weighting and Visibility can also be controlled from this page.

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