Tracking Stop Loss - Definition

✔️ Information reviewed and updated in December 2023 by Eduardo López

In the world of Trading there are functions designed to protect your operations from losses. One of them is the Stop Loss, a kind of emergency brake that is responsible for closing your positions when they reached a risky maximum loss for your budget.

Within the world of this indicator we find different varieties designed to act intelligently by adapting to market operations. Here we will talk about Tracking Stop Loss, a way in which we can protect ourselves from price falls, but at the same time, look for better capital gains.

✨What is Tracking Stop Loss? ✨

The monitoring indicator is a unique tool which allows us to set a Stop Loss with conditions defined by the Trader. This indicator operates intelligently, allowing us to operate in the market under certain parameters, monitoring prices..

Basically it is a conditional order which allows us to protect the gains of an open position while following the evolution of the asset. The advantage is that, when monitoring it, this safety brake does not activate at the slightest change, which guarantees our profits.

Stop loss

✨ When to use a tracking Stop Loss? ✨

Designed to help us take full advantage of trends until they are gone, Tracking Stop Loss is a good way to trade in this mode. Similarly, it is widely used under the Swing Trader strategy.

It is also suggested to use this monitoring indicator when we do not want to be in front of the screen trading, but at the same time we want to follow the changes in the values. We will only need to configure it so that it follows the market and in the event of any unfavorable change, close positions.

Stop loss

✨ What you should know about this indicator✨

Although it is possible to adjust parameters, Stop Loss has neither the intelligence nor the flexibility to adapt to the market. That is, if this notice changes, it will close positions and now, it will not adapt to the change or adjust according to the current situation.

That is why many experts usually combine this tracking indicator with a manual one so that, upon detecting signs of change, they close the positions manually. In case of not being able to do so, the Stop Loss enters to protect your profits or reduce possible losses to the maximum.

Eduardo Lopez

Editor and Copywriter

I am Eduardo López Martínez, I was born in Madrid, Spain and I am 48 years old. I am a journalist and I am part of the team. Do you want to know a little more about me? I invite you to read my biography.

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