How Do I Calculate Trailing Stop Loss? - How to Calculate Trailing Stop Loss Order Setting

A trailing stop loss order setting level can be calculated using forex indicators such as the Parabolic SAR 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 traders to set trailing price stop loss levels

The Parabolic SAR provides good exit points that keep trailing the price of a currency pair.

In an uptrend, you should close long positions when the price falls below the parabolic SAR

In a downtrend, you should close short positions when the price rises above the parabolic SAR.

Parabolic SAR - Technical Indicator for Setting Trailing Stop Loss Levels

Bollinger Bands Indicator

Bollinger bands forex technical indicator use standard deviation indicator as a measure of volatility. Since standard deviations technical indicator is a measure of volatility, the bands are self adjusting meaning they widen during periods of higher volatility and contract during periods of lower volatility.

Bollinger Bands consist of Three bands designed to encompass the majority of a trading instruments price action. The middle band is a basis for the intermediate-term trend, mostly it is a 20 day period simple moving average, which also serves as the base for calculating the upper band and lower band. The upper band's and the lower band's distance from the middle band is determined by price volatility.

Since these bollinger bands are used to encompass the trading instrument price action, the bands can be used to set stop losses just outside the area of the bands.

Bollinger Band Indicator - Setting Trailing Stop Loss Level using Bollinger Bands