Is a mobile stop-loss order a tracking stop-loss order?

We all know that there are risks when investing, and one method we often use to reduce risks is to set a stop loss. So what is a mobile stop-loss used for?

1: Mobile stop loss

Mobile stop loss, also known as "tracking stop loss", refers to a stop loss set at a certain number of points based on the latest price and triggered only as the stock price moves in a favorable direction. It is an instruction set by investors when their Securities accounts experience a profit or loss stage. Mobile stop loss is a very good trading tool, especially in cases of significant price fluctuations, which can ensure that investors' profits are retained or losses are reduced. The concept of mobile stop loss is easy to say, but it is not easy to master. Investors need to be able to find their own stop-loss range in real life, and trading requires offense but cannot ignore defense. On the other hand, the actual execution of a stop loss is a test of investors' mentality rather than simply setting a stop loss.

Assuming the current price of spot gold is $1235 per ounce, At this price level, you are overweight, and the stop-loss position you set is $1234 per ounce. Then, the market follows your position and rises to $1245 per ounce. At this point, in order to prevent a correction or change in the market, you can change your stop-loss position to 1240. Even if you are swept to a stop loss, then you are still profitable. That's what tracking stop losses means.

2: The principle of moving stop loss

Investors open a long position and set the number of points between the current price and the moving stop loss. When the price rises, the mobile stop loss automatically increases to maintain the set spread. When the price drops, the moving stop-loss level remains unchanged.

Under this trading method, investors do not need to consider the level of profit and have the opportunity to use mobile stop losses to obtain the maximum profit when the price rises. At the same time, moving stop losses also limits losses.

For example, investors open a buy position in EUR/USD at a price of 1.1155 and then determine a stop loss price of 1.1145, while a mobile stop loss is set at 30 points. When EUR/USD rises to 1.1185, investors' stop-loss prices will automatically increase to 1.1175. Mobile stop losses will be able to lock in a 30-point profit for investors. Whenever the price of EUR/USD increases by 30 points, the stop loss price will continue to increase, and the customer's originally set 10-point stop loss distance will be saved.

Mobile stop loss is a very good trading tool, especially in situations of high price fluctuations, which can ensure your profitability. However, investors have to manually change stop-loss orders as trading profits increase when using stops. The mobile stop loss automatically sets the stop loss level based on the value required by the trader. Mobile stop loss is mainly applied by traders who engage in trend trading, but it is impossible to keep track of price changes unchanged. When it is necessary to respond quickly to price changes, intraday trading should also use mobile stop losses.

Mobile stop loss, like many methods and indicators, is also a double-edged sword. Mobile stop-loss can preserve the profit portion. The stop loss will change based on the number of points set by the moving stop loss. When the trading direction is consistent with the market direction, the stop-loss will correspondingly move up or down.

Mobile stop loss is a very good trading tool, especially in situations of high price fluctuations, which can ensure your profitability. However, investors have to manually change stop-loss orders as trading profits increase when using stops. The mobile stop loss automatically sets the stop loss level based on the value required by the trader. Mobile stop loss is mainly applied by traders who engage in trend trading, but it is impossible to keep track of price changes unchanged. When it is necessary to respond quickly to price changes, intraday trading should also use mobile stop losses.

Mobile stop loss, like many methods and indicators, is also a double-edged sword. Mobile stop-loss can preserve the profit portion. The stop loss will change based on the number of points set by the moving stop loss. When the trading direction is consistent with the market direction, the stop-loss will correspondingly move up or down.

For example, as in the previous example, a trader opened a multiple buy position for EUR/USD at 1.1155, set a stop loss price of 1.1145, set a moving stop loss of 30 points, set a stop profit of 1.1195 (1.1155 40), and set a stop profit of 40 points. When EUR/USD rises to 1.1185, the moving stop loss will move to 1.1175 (1.1145, 30 points). If there is a market price correction or consolidation at this time, the move stop loss will be triggered, resulting in a profit of 20 points (1.1175–1.1155). But at this point, the market was just undergoing a consolidation process, and the price continued to rise to 1.1000, exceeding the originally set stop-loss level. At this time, the orders had already closed their positions and exited the market. Originally, they were profitable by 40 points, but now they are only profitable by 20 points.

The price is easy to break the stop loss and then turn around. Therefore, in setting the stop loss point for moving, it is important to consider it comprehensively to prevent price adjustments from leading to stop loss exits. A better approach is to follow the "Dow Theory" method (the low point of a pullback or the high point of a rebound) to move the stop loss. This can maximize the profit points earned, and the effect is very good. It is unlikely to cause the price to turn back after the stop-loss is removed, and even such situations are rare.