Beginner's Orientation- Sharing Experiences On Technical Analysis Two Day Seminar

[cherubi]

Trailing Stop Loss

A trailing stop-loss order is a stoploss order in which the stop loss price is set at some fixed percentage below the current market price.

If the market price rises, the stop loss price rises proportionately, but if the stock price falls, the stop loss price doesn't change.

This robust stoploss technique allows an investor to set a limit on the maximum possible loss without setting a limit on the maximum possible gain, and without requiring paying attention to the investment on an ongoing basis.

The trailing stop-loss order is continually adjusted based on market volatility and trend always keeps at a certain distance to the market price.

I personally use the TradersEdgeIndia.com trend trading indicator as a trailing stoploss indicator for all my trades.

Please see attached chart of how I was able to hold on to my long position in an uncertain market condition.

As can seen on the chart the magenta coloured dotted line is a trailing stoploss and it trails the stock at a distance moving only in the direction of the profitable trend.

This stoploss either only moves up or sideways to help you lock in as much profits as possible.

Traderji,
Could you please tell me if Trailing Stop Order is existing in Indian Market? I can't find this feature in HDFC SEC, but normal Stop Loss order, yes; in which the set stop price doesn't rise when market price rise. Do other brokers have this feature in their trading platform software? Any advise please.
Thanks, cherubi

 

[MSN1979]

My experience over the many years of trading has proved to me that security price changes or movements are primarily random with a small trend component.

This fact is extremely important to those desiring to pursue day trading in a rational, scientific manner. It means that any attempt to trade short-term patterns and methods not based on trend are doomed to failure. It also explains why day trading is so difficult.

The shorter the time frame (day trading), the smaller the trend component.

Novice traders get lured to day trading because the price patterns on intra-day charts are similiar to the price patterns on long term charts. This similarity in chart appearance convinces novice traders that they can day trade successfully with the same tools they use on longer-term charts.

However, the trend-following tools and indicators that work in intermediate to long-term time frames won't work in day trading. This is because the trend component is so very small during the day that it is very unlikely for a novice day trader to make enough profits to overcome the costs of day trading.

In longer-term trading, you can let your profits run. In day trading you can only let your profits run to the end of the day. Thus your average profit per trade is much smaller.

Also, your costs of trading--slippage, the bid/asked spread and mistakes--stay roughly the same on a per trade basis. Thus, your day trading system must be much more consistent and robust to stay ahead of the costs of trading than would an intermediate to long-term system.

Remember that market price action is mostly random and the tendency of most markets to trend is the only possible edge in trading!

To be successful in trading one must use methods that exploit the non-random feature of market price action.

The trend component is certainly are not present every day. That is why the person who tries to day trade at least once every day, and perhaps even more often, is doomed to failure. The more often you day trade, the more likely it is that you will be a long-term loser.

Sir I am just trying to learn day trading, I hope what you said back then doesn't hold true today or else I am learning how to fail.