Trailing Stoploss?

#1
Hi Friends,

I'm working with trailing stoploss to come up with a good one.
I've some issues with regard to trailing stoploss. Although we discussed about one issue in the chat room, I would like to discuss all the issues. I request you to please provide some solution to it.

1. Can the trailing stoploss come down?
I'm using "Lowest low of the past 5 days bar" as the trailing stoploss. I came with this number "5 days" after working on it for some time. Its not a random number. As you can see from the attached chart(5min_Intraday and EOD_Nifty), the trailing SL comes down when the fifth bar forms lower low. At that time our SL will be triggered. So far no problem. I need your opinion whether my trailing stoploss is valid?

2. What should one do when a long bar takes our SL?
As you can see from the chart - LongBar_Infosys, one of the very long bar has taken out the trailing stoploss. But if we see the post scenario, the bull run is still intact. So how should one behave in such a schenario? Is it we should stick to our SL and get out?

3. What should one do when the price opens below the SL?
As you can see from the chart - OpensVeryLow_Nifty, the bar has its open below our SL. I note that only the bar's low is below the SL and it has closed at a normal range. So what should we do now? If we go by our SL, then should we sell immediately upon open of market, thereby missing a huge profit? To add to the confusion, the
price has been rising on that day.

Please give your suggestions on it.
Thanks a lot,
Praveen.
 

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Traderji

Super Moderator
#2
Hi Friends,

I'm working with trailing stoploss to come up with a good one.
I've some issues with regard to trailing stoploss. Although we discussed about one issue in the chat room, I would like to discuss all the issues. I request you to please provide some solution to it.

1. Can the trailing stoploss come down?
I'm using "Lowest low of the past 5 days bar" as the trailing stoploss. I came with this number "5 days" after working on it for some time. Its not a random number. As you can see from the attached chart(5min_Intraday and EOD_Nifty), the trailing SL comes down when the fifth bar forms lower low. At that time our SL will be triggered. So far no problem. I need your opinion whether my trailing stoploss is valid?

2. What should one do when a long bar takes our SL?
As you can see from the chart - LongBar_Infosys, one of the very long bar has taken out the trailing stoploss. But if we see the post scenario, the bull run is still intact. So how should one behave in such a schenario? Is it we should stick to our SL and get out?

3. What should one do when the price opens below the SL?
As you can see from the chart - OpensVeryLow_Nifty, the bar has its open below our SL. I note that only the bar's low is below the SL and it has closed at a normal range. So what should we do now? If we go by our SL, then should we sell immediately upon open of market, thereby missing a huge profit? To add to the confusion, the
price has been rising on that day.

Please give your suggestions on it.
Thanks a lot,
Praveen.
You can experiment with different time peiods for your stoploss. Try a 10 bar or even a 20 bar. That way you may get fewer whipsaws.

To avoid the problem you are facing with a long bar (typically happens at the opening) try waiting for a close below the trailing stoploss before exiting your position.
 

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