Pros and Cons of Stop-Loss Trailing

On July 2, a trade went long on #BTC at 60,425, with a stop-loss set at 59,500.

Later, the market rose as expected, reaching around 63k. At that point, I moved the stop-loss up to 62,300, executing a stop-loss trailing.

At the same time, anticipating resistance at 65k above, I also placed a take-profit order at 65k.

As a result, on the evening of the 6th, the market spiked directly, and the 62,300 stop-loss was triggered.

Faced with this situation, any trader would feel quite uncomfortable, as nearly half the profit was given back.

At this point, one might think, "If I had known this, I would not have trailed the stop-loss. If I had kept the original stop-loss, wouldn't I have captured higher profits?"

But, upon reflection, if the market had not spiked but instead reversed downward, wouldn't the profit have gone to zero or even turned into a floating loss?

Therefore, stop-loss trailing has both pros and cons; you just have to choose which one:

If you want to capture a larger trend, you have to bear larger volatility, but bearing larger volatility may mean your profits could be completely given back.

Conversely, if you don't want to bear larger volatility, then it's hard to capture larger trends, but the advantage is that overall capital drawdown will be smaller.

So is there a compromise approach that can be optimized?

Actually, there is. For example, you can use half of the position for trailing stop-loss or trailing take-profit, while the other half continues to endure larger volatility. That way, if the market develops a decent trend, there is still a position on board.

So no matter what strategy, in the end, you can't escape "gains and losses come from the same source." #q #mu