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In the dynamic realm of forex trading, mastering risk management is an essential cornerstone of success. One potent technique that traders often deploy to safeguard profits and mitigate potential losses is the trailing stop loss.
Set up this function: it is simply to click on “Candles” under “Absolute Trail S.Loss” section on the “Trade Management” dashboard as above video.
To adjust the parameters such as number of back candles and Pad-amount (the distance between the wick and new stoploss value in pips, let press F7 to open EA properties, then scroll down to find the parameters.
How Does the Trailing Stop Loss with Wick Strategy Operate?
The essence behind the trailing stop loss paired with the lowest/highest wick strategy involves adapting the stop loss level in alignment with recent price movements. As market prices progress favorably, the stop loss level continually trails, aligning with the lowest wick (for long trades) or the highest wick (for short trades) of a specified number of past candles. This strategic approach systematically preserves profits as price action aligns with the trader’s intentions.
For instance, envision a long trade scenario. Initially, the stop loss is positioned beneath the lowest wick of the previous 9 candles. As price ascends, the stop loss dynamically adjusts to perpetually remain beneath the lowest wick, thereby assuring that potential reversals do not erase substantial portions of accrued gains.
Benefits in the Context of Risk Management
Profit Safeguarding: The synergy between trailing stop loss and wicks shields earned profits. This precautionary measure guarantees that, in the event of an abrupt reversal, traders exit the trade while retaining a significant portion of accumulated profits.
Emotion-Free Execution: The automated adaptation of stop loss levels based on objective price levels diminishes emotionally-driven decisions during moments of market pressure.
Harnessing Trend Movements: This strategy flourishes particularly in trending markets, enabling traders to capitalize on extended price movements while simultaneously maintaining a safety net to secure profits.
Optimized Risk-to-Reward Ratio: Trailing stop loss empowers traders to uphold a favorable risk-to-reward ratio, facilitating the extension of winning trades while expeditiously cutting losses.
Utilizing the MT4 Trade Manager EA for Seamless Implementation
To execute the trailing stop loss with wick strategy, traders can harness the potential of tools like the MetaTrader 4 (MT4) Trade Manager Expert Advisor (EA). This sophisticated EA streamlines the process of stop loss adjustment based on the lowest or highest wick of the previous candles. This automation guarantees adherence to predetermined risk parameters, all while eliminating the need for constant manual intervention.
In summation, the confluence of the trailing stop loss with the lowest/highest wick strategy is a dynamic asset in forex trading’s risk management arsenal. This strategy empowers traders to secure profits, seize trend momentum, and mitigate the impact of market reversals. By leveraging resources like the MT4 Trade Manager EA, traders can seamlessly implement this strategy, elevating their trading efficacy and fortifying their prospects for sustained success.
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