We consider the Trailing Stop Loss to be one of the most important strategy and also a key factor to a profitable long trading.
In this article you will read more about why.
Our team worked hard in way of developing automated trading for the last years, doing several backtesting in vriety of indicators and ways. It turned out that the most cleanest and simplest way of attaining better success ratios is just by using Trailing Stop loss strategy.
Why Trailing stop loss increases profit in the long run?
Considure that you norrmaly would plan a 10% target or a 2% target, when you reach your target you would plan a sell all now, or sell a portion of your deal. In this scenario you will get the 10% target you chosen. But you are never sure maybe the price can still go upwards. There is always a 50/50 chance for the price to move up or down. So what a trailing stop loss can do is give you a chance to get even more higher target. When it turns to doing a couple trades a week it may seem to not pay out that well. But when you do many trades a week you will find that when you were planing a 2% target and used our 2% backested trailing strategy, that there will be trades that managed to get much more than the 2% target in the begining.
Don't limit your chances allow room to rise, and secure profit taking if the price fall that is the point of Trailing Stop Loss.
We serv a uniq trailing stop loss strategy just because we care about traders and we want to give the best performance. Normaly a trailing stop loss in other places would be a % of the price lets say 0.5% of the price. So if target reaches 1% then the system will sell at 0.5% which is good, but also not that good. When you have 1% target using our tool you will get 0.9% and also our backtested tool gives you a spreaded trailing meaning that if the price goes 10% upwards, a 0.5% slide can instantly triger a sell moment.
So we also provide backtested trailing strategy that is spreaded the higher the profit goes the wider the gap for profit taking becomes, ensuring that a fast rising volatile market can be taken to maximum profit.
Here are the backtesting results
We compared results from 2 years data of Bitcoin. If a trading bot makes a deal every minute. With a 2% target and a 2% stop loss, it turned out to be almost -0.5% AVG profit on a trade making a aprox. of ~900k trades.
We also used different types of indicators for buying positions. The more indicators normaly we add the less deals we can make, but the AVG profit doesn't change. Pointing out that indicators do not help in trading. They do help in few trades but when it gets to testing them on 1million different trades it turns out 50/50 on a 2% target and 2% stop loss. Eventualy losing -0.5% on a deal. ( Comiisions and wall gaps included )
So... The bottom line, TRALINING STOP LOSS!
No matter when you buy! No matter what you buy, if it has good commisions and a wall gap less than 0.04% a trailing stop loss with a 2% stop loss. Will give you 0.25% profit on every deal you make. Thats by average a 0.75% better than using no stop loss. It's just because a trailing stop loss will alow the target to have more room to rise, and take profit on each rising level.
So if you trade between trend lines, support lines and do rapid high frequency trading then Trailing stop loss strategies will help you to get more out frorm your trades!
Use different trailing stop loss strategies
Always check the market volatility % in the selected price action period. When a market is highly volatile and you plan to enter a trade on a support level you can use a Stop loss that allows more room for the price to rise. For example 2% backtested method.
If a market volatility is very small like 2 - 3% . Then you can use the smallest trailing stop loss strategy 0.5% backtested.
Using wider trailings can end up in your deal to be freezed for a while. Using smaller trails can lead to quick profit taking but also limit the chance of getting a higher profit target.
Trade safely and always do simulation testing before you test out new strategies!