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Trailing stop loss is a great way to increase your trading profits. Not many traders use trailing stop loss to increase their profits.
Today many online brokers have platforms where traders can use trailing stop loss and increase their profits.
Trailing stop loss is also used by experienced Intraday traders.
Stop loss is different that trailing stop loss.
For wealthy traders trailing stop loss is a boon.
What is trailing stop loss?
Trailing Stop Loss is a taking profits off like a ladder.
Some profits on the first ladder, then some off next, then some more on the next and all in the fourth or fifth ladder.
Example of A Trailing Stop Loss to Take Out More Profits
Trader A buys 100 stocks of company XYZ at 500. His target is 550 or above. Stock moves to 545. He sees it and keeps a sell order of 50 stocks (50%) at 550. Stock moves up and reaches 550. 50 of his stocks gets sold at 550. He keeps a stop sell order for the rest of the stocks at 540. Stock moves up to 565. Seeing this the trader moves his stop sell order for the rest from 540 to 560. Stock goes to 570. The trader moves the stop sell to 565. Stock now moves to 578. The trader moves the stop sell to 575. Stock comes back bit down and the stop sell order at 575 gets hit. All stock gets sold.
Here is the calculation: Stock sold at (550 + 575) / 2 = 562.50
So a stock that was supposed to be sold at 550 got sold at 562.50.
The trader made extra money because he followed the trailing stop loss method.
Trailing stop loss is a great method to make more profits from a profitable trade.
Is it possible in futures and options trading?
Yes it is possible. However more skills and experience is required.
Is this possible while taking a loss?
Ideally loss should be fixed and taken immediately. However one can try to take 50% loss at a certain stage then wait for a pullback then take a profit or get out cost to cost in the remaining. But if pullback does not happen then the trader should exit at a certain point all of their holdings.
It is always better to take a loss at a predefined place but keep a trailing stop loss (actually profit) in ladder fashion written above.
Is it Possible To Automate Trailing Stop Loss to Take Out More Profits?
Yes institutional investors and fund houses especially in USA have automated many trading strategies including trailing stop loss orders to decrease loss and increase profits. However the software to automate trades are very costly. A multi million dollar fund house can afford such machines and software, but for retail traders the only way out to get more profits out of trailing stop loss is to do it manually.
Hope you learned a valuable lesson today. More will keep coming.
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What you should do now1. If you have still not subscribed for my free 5 days course you can do by filling the form above. You will learn a lot about option trading.
2. If you are a new option trader, not much experienced and are making losses you can do my paid course. I recommend Nifty Conservative Option Course for beginners because it is easy to understand and easy to trade. Even a 18 year old young trader or a housewife can learn it and start trading from next day. It will help you to earn consistent monthly income without any software or speculation or stress or big risk. You will learn proper hedging strategies that works in any market condition.
3. If you are banknifty weekly options trader you can do my Bank Nifty Weekly Options & Futures Strategy Course. You will learn future and option hedging strategies that works in volatile market condition.
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Course fees: Click here to know the course fees.
Here is complete process of my course1. Once you pay I will send you the course materials for studying to your email.
2. You read and ask me questions via phone/whatsapp/email to clear doubts.
3. Then you start paper trading and still can ask me questions.
4. After about one month you can start trading.
5. Since doubts can come anytime the support will be there for one year.
Within one month you can start trading on your own. No need to depend on anyone once you are on your own.
If you have any question you can contact me.
You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the best possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website.