In foreign exchange transactions, trailing stop loss is the most important means to help investors reduce transaction risks. Trailing stop loss can help investors quickly close their positions to ensure their own profits when the exchange rate reverses. The following editor will bring investors a detailed explanation of the moving stop loss of foreign exchange transactions.
Foreign exchange trading is a skill that all investors must master when speculating in foreign exchange, which can effectively prevent profit taking. Trailing stop loss is not set at the right time. It must be used together with the stop loss order. The most important function of trailing stop loss is to lock in the loss caused by not closing the position in time.
To set a trailing stop loss for foreign exchange transactions, investors must first use technical analysis to set their own stop loss price, and then set the trailing stop loss points. Under normal circumstances, the minimum trailing stop loss is set to 10 points, and the maximum can be set to 500 points.
After the investor sets the trailing stop loss, if the exchange rate moves in the direction of the order, it will not trigger the trailing stop loss, and the foreign exchange software will automatically increase the price of the trailing stop loss in the direction of the transaction. If the exchange rate reverses and moves in the opposite direction of your own order, then it will start to move the stop loss and automatically close the investor’s position. So as to ensure that the part that you have already profited will not be lost as the exchange rate reverses.
For example, if the investor is long EURUSD, the trading price at that time was 1.2100/03. In order to better control the risk, the investor set a stop loss and set a 30-point trailing stop loss at 1.2083. Later, if the exchange rate rises to 1.2153/56, the trailing stop loss will also rise to 1.2113. After that, the exchange rate suddenly reversed. When the home fell to 1.2083, it would start a trailing stop loss, thus closing the order. This ensures the profitability of their crude oil.
Trailing stop loss is very useful for investors who don’t have time to keep track of the order for a long time. Therefore, when investors place an order, in addition to setting a stop loss for no order, it is best to set a trailing stop loss.