Using a trailing stop loss on your positions can helps you to manage your positions and take care of your profit automatically.
I personally don’t use trailing stop loss, but maybe you are interested in it because of the different trading strategies you use, especially if you like trading major news events or you just want to know what is a trailing stop loss and how it works. This tutorial will teach you that.
What Is Trailing Stop Loss?
Trailing stop loss is a feature that is found on your MT4 trading platform or other trading platforms.
When you set it on an open position, it moves your stop loss further when the price moves toward the target automatically.
When price moves in your favor by the amount of pips that you set, your stop loss will automatically move to break even. From there, when price moves in your favor, your stop loss moves by the same amount.
For example,You set a custom trailing stop value of 100 points ( 10 pips trailing stop). If price moves in your favor by 10 pips, your stop loss will moved to break even.
If price continues to move in your favor, your stop loss will also continue to trail behind price by 10 pips. This will continue until your take profit target is hit.
However, if the price reverse for more than 10 pips, your trailing stop loss will be hit and you will be out of that position this is because trailing stop can only move in one direction.
This is how the trailing stop loss locks your profit.
How to set a trailing stop loss on MT4
How to Set a Trailing Stop Loss on MT4
Step 1. Take a position and set the stop loss and take profit target.
Step 2. Simply right-click on the order that you want to add a trailing stop loss to, in the “Terminal” window or simple click “Ctrl+t” on your keyboard. navigate to “Trailing Stop”.
Note:Looking at the picture above, you will notice that is says “points” instead of “pips” this might be confusing if you don’t know the difference between pips and points so here IS a short explanation:
Each point is worth 1/10th of a pip: 1 pip equal to 10 point, 2 pips equal 20 points, etc…
STEP 3. Select your desired amount of trailing stop pips from the preset menu, or select “Custom” to enter a custom number.
Step 4. Click on the “OK” button and you are done. Remember to leave your platform and computer on.
Trailing stop relies on your trading platform being open. It’s not handled by your broker’s server like a regular stop loss that works even if you close your platform or switch off your computer.
Note* IF you turn off your computer or close your MT4 platform, the trailing stop loss will not work anymore, and the stop loss will not be moved.
Also, If you don’t set any stop loss for your position, but you set a trailing stop loss, then the trailing stop loss will set a stop loss at breakeven, as soon as it is the time for the trailing stop loss to move the stop loss to breakeven.
That’s all you need to know about a trailing stop loss.
For more tutorials on MT4 platform make sure you visit the MT4 platform category.
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