Trailing Stop Loss Indices Order Definition Explained with Examples

A trailing stop loss is a stop loss levels that keeps adjusting itself automatically by a set number of pips once the stock indices trading market moves in the direction of the indices trader's open position by a number of pips.

For example the trailing stop can be set at 30 pips and set to adjust itself to 30 pips automatically once the indices price moves up by 5 or 10 pips. This means that this trailing stop loss stock indices order will keep trailing the stock indices price as long as the stock indices price keeps moving in the direction of the indices trader's open position.

This trailing stop loss will close the order once the stock indices trading market starts to retrace and it retraces to the level of the most recent set trailing stop loss level.

A good indicator used to set trailing stop loss levels is the Parabolic SAR indicator:

Parabolic SAR Indices Indicator

Parabolic SAR is used by stock indices traders to set a trailing stock indices price stop loss levels

The Parabolic SAR provides good exit points that keep trailing the stock indices price on a stock indices chart.

In an upward indices trend, you should close long positions when the stock indices price falls below the parabolic SAR

In a downward indices trend, you should close short positions when the stock indices price rises above the parabolic SAR.

If you are trading long then the stock indices price is above the parabolic SAR, the parabolic SAR will move up every day, regardless of the direction in which the stock indices price is moving. The amount the parabolic SAR moves up depends on the amount that stock indices prices moves. Once stock indices price moves below the parabolic SAR as shown on the stock indices trading example explained and illustrated below, then traders should close their open buy stock indices trades at the trailing stop level provided by the Parabolic SAR indicator.

Parabolic SAR - Stock Indices Indicator for Setting Trailing Stop Loss Indices Order Levels