pros and cons
Trailing Stop is an effective tool for flexible trading risk insurance. It allows a trader to gain maximum profit by changing the level of Stop Loss automatically. It can be used independently as a risk insurance tool and as an element of a strategy. Below you will learn what is a Trailing Stop, how to use it, what are the strategies for using it, what are the advantages and disadvantages of this tool and recommendations on trading with this risk insurance tool.
There was a time when it was impossible to trade with leverage higher than 1 to 100 or with fractional lots on forex or stock markets. It was impossible to open a position with a volume of less than one standard lot. It means that one could trade at the forex market only with a deposit of several thousand dollars and to comply with the risks in trading one needed a deposit of tens if not hundreds of thousands of dollars. It is clear that under such conditions forex market could not be as widespread as it is today.
Investors trading in the financial market commonly face issues with equity, which creates difficulties in conducting operations with currency pairs and other assets. This lack of equity is primarily due to the modest income generated from investments. Consequently, investors explore various options to address this issue, with the most popular being a margin provided by brokerage companies as collateral while obtaining credit. However, the margin has its unique features and drawbacks that a trader must be aware of before making a decision.
Traders can use different strategies in practice - from the simplest, suggesting buying and holding assets for some time, to more complex financial manipulations, involving the use of different assets and technical tools. One of the ways of forex trading, the use of which allows one to earn good money, is day trading. Let us find out what that is and what strategies it includes.