How to set a trailing stop loss?


Established member
649 54
Hi, I'm interested in hearing what methods everyone uses for setting trailing stop loss?

One I have found is based on Bulkowski - Average the difference between high/low of previous month, times the result by 2, divide by low of last day of month..
Although this seems to give me a stop not really tight enough..ifyouknowwaddimean..

Any tips?


Active member
163 7
Previous week average daily range works well for me. Well you got to exclude NFP and FOMC or any other outliers


Legendary member
7,598 2,374
Hi paszkman,
From your post, I think what you're interested in is the way members decide how far to set a trailing stop from the current price - as opposed to how to set a trailing stop per se - as implied by the thread title? The latter is purely a function of the trading platform being used, which will vary from one broker/platform to the next whereas, the former is at the discretion of each trader.

A simple way of doing something similar to what you outline is to use the Average True Range (ATR) technical indicator. The default setting will be 14 periods (i.e. 14 minutes, hours, days or weeks etc.) You can adjust this up or down to increase or lessen the impact of the most recent price volatility. Additionally, you can adjust the multiple that you set the trailing stop to. A common starting point would be 2 x ATR. So, if the average true range of the Dow daily price bar is, say, 100 points, then your trailing stop will be set at 200 points from the highest price (assuming you're long). If you want to increase the sensitivity, you could reduce it to 1 x ATR or, even, 0.5 x ATR. Needless to say, the lower you set the ATR multiple, the greater the probability of your stop being hit.

If your trading platform doesn't permit you to set a trailing stop and you want a visual overlay on to your charts so that you can adjust your stop manually, take a look look at Keltner Channels. These show upper and lower limits for price movements based on ATR.


Established member
649 54
Yes, far to set the trailing stop, not how to set the stop...

thanks for the response!
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Active member
247 21
It doesn't matter how you set it, a "trailing stop loss" will never get hit!

Sorry, couldn't resist.


74 9
Hi paskman,

The most frequent method I use is a multiple of 40 period ATR. 4.5 times ATR for breakout trend following entries and 1.25 times for my counter trend model. In both cases the ATR multiple may be slightly adjusted based upon the past years worth of data and how large an average swing has been. Same method used for equities, forex and futures. Daily data.


3 0
ATR is not a sufficient approach in today's market. Moving averages is not enough. There are thousands of technical studies that you can combine in many different ways and that can take years of experimenting with to develop the right approach. search for a smart trailing stop approach.
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