Topic: Trailing stop loss - yay or nay? (Read 262 times)

Trailing stop loss may appear like a food practice be design but in reality, it can damage the entire trading process by infusing in the trader some sort of psychological problems such as doubts and fear. Take a case of when you place a trade that have given you 80% of your target and you decide to lock in your profits at 20% and allow the trade to hit your main target, perhaps you went to bed  and on waking up you realised that a reversal occurs and you have been taken out of the trade, this will hurt your feelings so much because you will be filled with regrets of losing that 60% to the market. Instead of trailing stops, I prefer taking partial profits.

I mean that I don't make an order like sell Bitcoin at 100K or something similar because I'm afraid that I'll miss a better opportunity. In 2020, I made an order to sell Bitcoin at 26K. A few days later after making this order, my Bitcoins got sold at 26K but Bitcoin went higher than that price and I started panicking because I didn't want to miss good profit. Since that moment I decided that when there is a bull run, I'm holding it for a very long time and I won't set limits on myself like selling Bitcoin at 100K or similar.

Btw I'm using Binance. On Binance, you can open order like sell Bitcoin at 100K and when the spot price reaches 100K USD, your order will automatically be fulfilled.

It is better to use a percentage for a trailing stop loss, this way as the price goes up, your stop loss gets wider, this protects you from exiting the market too soon when the bull market could still have the potential to keep moving the price up, however how big of a percentage to use depends on the capital you have invested in bitcoin and how much money you are willing to lose when opening your position, otherwise we cannot tell you how big that percentage should be.

Having as much as 10% of your account at risk on a single trade is such a loosing trading strategy, at most should be 2-3% of your account on a single trad and that way if you loose you don't get a sever hit as much as you would having 10-15% at risk on a single, so if you open multiple positions upto five, you may be having almost the whole of your account liquidating in the shortest time possible should the trad goes against you but when you use a trailing stop at about 2-3% of your account, you have little to almost nothing to really wori about in the end.

I don't understand what you mean when you say that you don't set trailing stop-loss on a high price limit during bull markets because you're afraid to make wrong predictions of the top prices as you always expect high ATHs. How are you able to do that? It's a special feature? On which exchange are you using it? On Kraken exchange you can't define a price limit even with a trailing stop limit order because the limit order you'll get will be calculated with an offset from the dynamic trigger price, so it's only a relative order, not an order with an absolute price. In addition, it defeats the purpose of the trailing stop orders which is to automatically manage sales without having to make predictions, precisely but maybe on the exchange you are using a feature allows to trigger it above or below a set price?

I wasn't using a trailing stop-loss on my opened trading positions because I wanted to profit as much as possible but I learnt from my mistakes that cost me thousands of dollars. If you are a very risky trader and go all-in, then you don't need to use the trailing stop-loss option but if you err on the side of caution, then you should at least use a stop-loss option where you won't let your coins fall below a certain price and you'll automatically sell them. To use a trailing stop-loss option on profit, is a little debatable because you might miss a higher price. During the bull market, I don't set trailing stop-loss on a high price limit because there is a high chance that my prediction of a high price will be wrong and I always expect a big ATH. I also always try to read some news and be in touch with the latest updates. It's one negative news that busts the bubble, you shouldn't miss that if you want to get the most profit out of it.

I'm not really using it (yet) just considering, hence asking here for opinions/experiences. I've only placed a small test order.
But they do have trailing stop losses on Kraken (Kraken Pro, to be precise), along with multiple other tools.

On which exchange are you using them precisely? Trailing stop orders are interesting when Bitcoin get sudden pumps from unexpected news or from large buyings by some whales, because it's difficult to estimate which price it could reach so if your common limit sell order is too low you will miss the opportunity of getting larger gains and if it is too high you will totally miss the pump(and often dump right after) movement. But unfortunately it doesn't happen much times with BTC, so I think they are more useful with cryptos with higher volatility and smaller markets.

Thanks for sharing.
It seems like the goal of your strategy is pretty different from what I'm aiming at though.
If we peak at say $102k and start going down, you'd only cash out <$9k, and still be holding 0.9btc, so not really taking much advantage of a bull run.
With trailing stop loss set at 15%, you'd cash out $86.7k and you could buy back cheaper to increase your BTC holding (if that's your goal).

And if Bitcoin were to move steadily up, and you had your sell increments set every 3k starting from $72k, you'd sell the last 0.01 of it at $369k for a total of $220.5 and you'd miss out on any further gains. With the trailing stop, if all works right, you won't have to worry about predicting where the top will be.

The main problem with the trailing stop loss for Bitcoin is that historically we've seen dips of 20% or 30% when the price was still on its way to the peak. And setting the trailing offset at more than 30% makes it not very attractive in my opinion.
So I'll probably end up either not using it, or using it only for a portion of my holding.

Depending on your trading strategy, if you intend to trade daily and with high risks, you must use trading bots and Trailing stop loss can be programmed as part of the trading code. Long or medium-term trading can be done manually and Trailing stop loss can be used to reduce risks.

I believe in Bitcoin and my belief is Bitcoin will continue its growth in adoption, value and price, but it does not mean I see no risk in Bitcoin. There are many things unexpectedly and uncontrollably so that stop loss order, trailing stop loss order, stop limit order are all helpful orders to support you in trading. It helps you to take profit, secure your profit small or big, and avoid loss or big loss.

Black swan events can appear anytime, with anything including Bitcoin. Don't be too confident and lose your money in unwanted black swan events.

Making use of stop-loss in your short-term to intraday trades is certainly a good idea and I have been emphasizing this for long time.

Basically all kind of stop-loss levels should be obtained from technical analysis and if you place your stop-loss levels based on your capital or what you afford kind of strategy then market will most probably eat your stop-loss. This way, fixed value or percentage value of stop-loss levels are not making any sense to me. I mean both your target and stop-loss levels should be derived through the same TA which was used to find the entry point for your trades.

I do see people are using trailing stop-loss when market is going against their open-position. It is kind of suicidal because the basics of using stop-loss is only for cutting the losses at possible minimum. Trailing stop-loss is good when market moves on your direction to maximize your profits.

With BTC - no stops are needed if you don't do it with leverage.
So, it's a good tool in a trader's hands, but mostly with other assets that can be traded daily with potential gains.

Thanks for this question, you know, sometimes I am in this confuse state of deciding if I should apply the ST/TP in my trade and I am usually very adamant to use it in most trade but I have been liquidated many time because I don't like using it unless if am going to to sleep, that's only when I apply it.

Another thing too is that, by not setting the TP in my trades, price usually goes up high and comes back below where I should have taken a huge profit initially and by that time, I begin to bite my fingers in regret of not taking profit where I was supposed to.

Personally, I now think it's good to set the Stop lose and take profit. It helps stops the trader from having a biase decision. I don't use it in every of my trade though.

In the aspects of setting take profit, I don't go below 20%, it's usually higher. Depending on your position size, take the percentage of profit which you know is really worth it for that particular trade but don't be greedy. For example, a position size of $500, at 20% price increase, you have made $100 just in that one trade.

Below was my trade on 13th, I did set a TP if the price reached $92k and it got executed and price even reached $93k that day but at least my profit percentage was 90%, I only downloaded the below image before the trade was executed after which bybit doesn't allow me to view the receipt like that again.

I agree that holding bitcoin is good, but it's not the only way to interact your money with bitcoin.

It's good for investors because Bitcoin history with very good ROI over many years, proves that holding bitcoin is very good method to get profit.

ROI chart shows this https://casebitcoin.com/charts#roi_chart

Although I agree with you as I said, this board is Trading board that allows people to discuss about trading, mainly on trading, not only holding.

Trading with trailing stop loss can help you to secure your profit even when the market reverse. It's better than normal stop loss order and trailing stop loss order is more like securing-profit stop order. By using it, you will get profit only small or big and don't have to rely on your emotion and decision to take profit or to wait for price rally after a fall, correction, dump to take profit because you miss a previous chance.

Never used this type of stop loss, however I agree that the market now is like an ocean in storm  So it would be wise to get everything into your own hands if you know what you are doing.

So it's better to just.. Manually go in and out due to the situation on the market?

will get different answers based on your risk management strategy, it is part of the trading bot or the general strategy that you adopt, although you are worried about the risks, you are limiting the profits, especially since we know that the current levels are not strong levels and may be broken easily, so nothing prevents the price from reaching $120,000 if the $100,000 level is broken, Trailing stop loss will give weak results here.

Real traders know how important trailing stop loss because it is also a way to lock your profits already or just breaking even your position which will make sure you don't have losses or profits sometimes just incase the market will go in opposite direction.

In market like this right now which extremely volatile, securing profits is really a must especially if you are active trader and sensitive to profits and losses.

I think the best choice depends on your risk tolerance and the typical volatility of Bitcoin. A 10% trailing stop could be a bit tight for a volatile asset like BTC, possibly triggering too often on regular fluctuations. In contrast, 15-20% might allow you to ride out smaller dips while still providing protection if there's a significant reversal.

Using a percentage-based stop is generally more adaptive than a fixed fiat amount, as it adjusts based on price moves, though some traders prefer the predictability of a fiat-level stop.

I do not like auto trading

lets say I have 1 btc acquired at 22k

and at 66k

I decide to do a sell ladder

0.01 btc at 72k
0.01 btc at 75k
0.01 btc at 78k
0.01 btc at 81k
0.01 btc at 84k


 now that I sold 0.05btc

I set buys at
51k
48k
42k

a rest and a higher ladder
0.01btc at 89k
0.01btc at 92k
0.01btc at 95k
0.01btc at 98k
0.01btc at 101k

so if you look above you sold 0.07 coin and still have .93 coin

with 3 sales set

plus you have buys at 3 low levels

if we continue up you end up with .9 coins

and you may or may not set a higher sell ladder

say
111k
115k
119k
123k
127k

I prefer what's above  than your auto set

The use of any of the trading strategies for now is on a very high risk, because the crypto market is highly volatile with bitcoin making new highs almost each day, many assets are getting liquidated except by the use of stop loss on either of the order placed on trade, though i still buy the idea that we should put a limit to the rate at which we are going to lose from a trade by using a trailing stop loss function, which is also another strategy on it own to help us control the rate at which we lose while on making trades.

Trailing stop is one of the good ways that even if you sleep or go beyond the Tp you set and it continues to increase or decrease in price, it will also eat all the possibilities that you can get profit from.

Often if you use those tools, instead of the one where you just set the Tp, the Tp you can get is up to that point, unlike if you have a trailing stop set up, you can convert everything at least 5%-10%.

Good point. I completely forgot we have "Trading Discussion" board. I moved it here.


I understand this sentiment and that was my strategy for many years. But I had regrets after the last bullrun of not taking advantage of it, selling high and buying back more at a lower price, maximising my holdings. After the 2021 pump, we now have more data and know that the price was acting in a similar way than in the previous cycles, so, based on that, it should be easier to know what to expect this time.
But yeah, if someone is not comfortable in trying to time the market, holding is a good idea.

When making Bitcoin accumulation, there is always some target in our mind, which, if that price is reached based on our own expectation, that's supposed to be our selling price, but because of a little greed of not knowing what will become of the price in time to come and fear of what will happen if the price drops below that amount, it makes us calculating if we are to sell or not. 
 
If I'm to find myself in such situations, the amount I will sell is not going to be calculated based on the total volume I hold, but it will be based on how much profit is added and the volume I bought at a particular price. My selling will be based on the pattern I use to accumulate, but I won't sell above 50% of the total, so that if there is any negative or positive impact to the market, I won't have much to lose or regret.

People on this board will prefer to discuss about holding bitcoin. A post like this will better be in trading discussion. Holders will prefer to have their coins on a noncustodial wallet where there is nothing like stop loss, take profit or trading stop. If they want to exchange, they will move their coins to exchange and convert it using market order after they have made profit already.

As in the subject - is setting up a trailing stop loss for Bitcoin a good idea to (somewhat) maximise your profits? You will never hit the exact top with this strategy but you are unlikely to hit it anyway. The convenience of it and not having to worry about the price all the time sounds pretty appealing to me.

If it's a good idea, what would be the most optimal trailing level (trailing offset)? 10%? 15%? More? Or maybe it would be better to define it in fiat amount rather than percentage?

Any thoughts/experiences?