How Do I Calculate Trailing Stop-Loss Order in Indices Trade
How Do I Trade Indices & Calculate Trailing Stop-Loss in Indices Trade?
A trailing stoploss order setting level can be calculated using trading indicators such as and like the Parabolic SAR trading indicator.
If the market rises by a set number of pips the parabolic SAR indicator then adjusts the trailing stop loss level upwards accordingly.
Also if the market falls by a set number of pips the parabolic SAR indicator then adjusts the trailing stop loss level downwards accordingly.
Parabolic SAR Indicator
Parabolic SAR is used by stock traders to set trailing stock price stop loss zones
The Parabolic SAR indicator provides good exit levels that keep trailing the price of a indices.
In an upwards trend, you as a indices trader should close buy indices trades when the price falls and drops below the parabolic SAR
In a downwards trend, you should close short trades when the price rises above the parabolic SAR indicator.
Parabolic SAR - Technical Indicator for Setting Trailing Stop-Loss Order Levels
Bollinger Band Indicator
Bollinger Band indicator use standard deviation indicator as a measure of price volatility. Since standard deviation is a measure/estimate of stock price volatility, the bands are self-adjusting meaning they widen during periods of higher stock price volatility & contract during periods of lower stock price volatility.
Bollinger Band consist of 3 Bollinger bands designed to encompass the majority of a instruments stock price action. The middle band is the one that forms a basis for the intermediate term trend, typically it is 20 period simple moving average, which is also the base for upper and lower bands. The upper band's & lower band's distance from the mid band is determined by price volatility.
Since these bollinger bands are used to encompass the instrument stock price action, the bands can be used to set stop loss orders just outside the area of the bollinger bands.
Bollinger Band Indicator
How to Calculate Trailing Stop-Loss Order
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