Maximize your Gains and Reduce Risks with Trailing Stop Sell and Trailing Limit Sell Tools

in trailing •  2 years ago 

In the crypto trading sphere, there are numerous tools and strategies that traders can use to maximize their potential gains while minimizing the possible losses. And, that’s why it is quite important to learn how to use them effectively to earn.

Let’s understand about such strategies:

Have you ever heard about trailing stop loss order? If not, you are at the right place. Like simple stop loss order, the trailing stop is an order which traders use to close the trades in case of market reversal. It’s an effective risk management tool. Traders can consider using different types of trailing stop orders like trailing stop sell, trailing stop limit order, trailing limit sell, etc.

Trailing stop

Trailing stop order is a stop loss order which follows the asset price rise in long position and fall in a short position at preset or predefined distances. But, how it will work?

If the price of an asset advances, the trailing stop loss order will follow the direction of the asset automatically. On the other side, if the price changes trend, the position will be closed while ensuring the profit percentage of the trader. The key objective of this order type is to protect the profits and avoid going to zero if the market reverses in direction. Trailing stop orders are very useful when we are not aware of the positions as these tools work automatically. The best crypto trading platforms like TrailingCrypto allow their traders to access these order types to earn good profits. How to use Trailing stops?

The trailing stop orders follow the market price movement of the assets in real time and stop when the market changes trends. The operation of a trailing stop order involves: • In long position, the trailing stop price will rise in line with the market and will stop whenever the price falls. The position will be closed automatically whenever its price falls to the predefined level. • During the short position, the trailing stop order will follow the downward movement and will freeze/stop whenever the price rises. This position will be closed automatically whenever the price reaches to the set level.

The key to successful utilization of the trailing stop order is to set it at the right level. This means, the fixed value or the percentage distance from the current market price should be big enough so that minor fluctuations in the market do not trigger trade execution prematurely. And, at the same time, it should not be small enough so that it doesn’t take up the bulk of your potential gains.

Please note that the trailing stop order will be activated whenever it is hit by the price. If you want to mitigate the inherent risks in the crypto trading market, make sure to use trailing limit sell and trailing stop sell orders to make the most in a bear market.

Let’s understand about these order types one by one:

Trailing stop sell

As compared to investing in the stock market or gold market, investing in crypto trading is a different thing. A Trailing stop sell order is a kind of stop order where it sets the initial stop price at some fixed distance below the market price. This distance is defined as the trailing distance. As the market price increases, the stop sell price also rises accordingly with the market but always at the set intervals. If the price of the asset falls, the stop price will remain the same/fixed. When the stop price is a hit, a market order will be submitted.

On the other side, trailing stop buy order is exactly the reverse of this. This trading strategy allows its traders to limit their losses without limiting the possible gains.

Trailing Limit sell

A trailing limit sell order is quite important in the crypto trading world as it allows traders to make the most in a bearish market trend. This order type helps traders to protect themselves from losing money and maximizing their gains at the best possible prices.

In this order type, the limit sell order trails the market price of the crypto asset and converts it into market order at the set price or at the better price. Traders can use trailing stop orders for both entering and exiting a position. Whenever you enter a position, you would refer to it as a buy order or trailing sell order. And, whenever you exit your position, you would refer it as trailing take profit or trailing stop loss.

Advantages of using Trailing stop orders

There are some benefits of using trailing stop orders in your trading strategies including: 1. In case, your analysis goes wrong then you will exit the trade automatically with a predefined loss. 2. But, if your analysis is correct, there will be no limit to the potential profits that you can churn out of the trade. The best part about this order type is that the stop loss price will move along with the market price movement. 3. Trailing stop orders assure meaningful investments with very limited losses. 4. You can customize the order according to your chosen risk management plan and its percentage could be changed from time to time as per the convenience of trader.

Conclusion

Risk management should be at the forefront of a solid trading strategy. Developing a trading strategy with dynamic stop loss levels allows traders to maximize their returns without any kind of risks. So, stops can be an excellent tool and you should make sure that you are using them correctly in the right way.
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