In this article, we will explain how to apply trailing stops on MT5 (MetaTrader 5). As you may well know, this is the most popular professional platform in online trading and is a worldwide success due to several factors that we have already explained in our MetaTrader guide. Its success can be summarized as follows: completeness of tools for technical analysis combined with a source of infinite resources in a community style.
Simply put, an advanced trading platform that offers everything you want, including the ability to access external sources in the same platform. These sources allow you to get additional guides, robots, signals, analysis, statistics and more.
What is a trailing stop?
Before we learn how to use the trailing stop on MT5, let’s review what we know first. What is a trailing stop? What is it for?
A trailing stop also called an ‘operational stop’ on some platforms, is an advanced type of stop that automatically adjusts the stop level based on the trend of the open position. If a position meets a favorable market, the trailing stop automatically moves the stop up or down, adjusting and optimizing the stop set.
How does the trailing stop work?
We said that the trailing stop moves the stop up and down in case of a favorable market. Here’s how:
Up: If you opened an upward position then profit from the upward movement of a price. In this case, the stop will rise as the price rises.
Below: If you have opened a down position then profit from the downward movement of a price. In this case, the stop will go down together with the price decrease.
To better understand the mechanism, let’s take this example. This is simple, but it may seem complicated when read.
Suppose the price is 80 and you set a stop at 75 for an upward position. If the price rises to 85, the stop will also rise by 5 points, going to set at 80. The new stop will then be 80 and no longer 75. This means that in this case, even if the price ‘went back’, it would practically go back to the opening price and with the click of the automatic stop, we would return in parity.
Another example. Let’s suppose that the price is 90 and that you set a stop at 85 for an upward position. If the price rises to 93, the stop will also rise by 5 points, going to set to 88. The new stop will then be 88 and no longer 85. This means that in case of a decline, we will have lost 2 instead of 5 with the automatic triggering of the stop.
Here’s another one. Suppose the price is 100 and you set a stop at 95 for an upward position. If the price rises to 108, the stop will also rise by 8 points, to 103. The new stop will then be 103 and no longer 95. This means that if, for example, the price goes back, the automatic stop will be triggered at 103 and then even with the stop loss we will get a profit.
How to Apply the Trailing Stop on MT5
Let’s now learn how to apply the trailing stop on MT5 in practice. First, if we open an order window on MetaTrader 5, it appears this way (see figure below).
As you can see, on the right side there are several items including Symbol, Type, Volume, Stop Loss, Take Profit, Comment, Deviation and then the Sell buttons for opening the short position and Buy buttons for opening the long position.
So what? Where can we find the ‘trailing stop’ option? Isn’t it possible to place such an order on MetaTrader 5?
Of course, it is.
To do this, you must first open a position with a stop loss.
Here is the confirmation of the open position.
Then, after opening the position, go to the toolbox below and select “trade”. Then, right click on the open trade where you wish to apply the trailing stop to.
Then, as you can see in the figure above, you have to select “Trailing Stop” and then you can select the desired value of the distance between the Stop Loss level and the current price, which are expressed in points.
To manually write a value, you can use the “Set custom level” button. In this way, you can manually set the trailing stop.
Warning: for each open position or pending order you can set only one Trailing Stop (one number) at a time.
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