How To Use Trailing Stop Loss

| August 2, 2012 | 0 Comments

how to set trailing stop lossOne of the things that you should know is when to exit a trade, or how to set a stop loss point, and this can be done through a variety of means. In this article, we will be discussing how to set a stop loss point with the Parabolic Stop-and-Reversal (SAR) indicator.

The Parabolic SAR is a technical indicator that can help you determine the direction of an instrument’s price movement. Developed by Welles Wilder, it is a very simple indicator to interpret because it only consists of a series of dots above or below an instrument’s current price on the chart. A rising price momentum will have the Parabolic SAR dots appear below the current price, and a falling price momentum will have the dots appear above.

Setting a stop loss position with the Parabolic SAR indicator is simple: Just set it to the level of the most recent Parabolic SAR dot. Note that the Parabolic SAR indicator only works in trending markets, as it whipsaws too much during non-trending markets.

Category: Trading

About the Author ()

John Tan has been Vice President of BlueTrust Investments Corporation for 6 years since the mid-90’s. He has since moved on, to be a professional full-time trader.

Leave a Reply