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Making the most of trailing stop losses

Making the most of trailing stop losses

August 10, 2021

Bogged Finance provides a variety of order types that are typically only avaliable on CeFi exchanges such as Binance. These include Limit Orders, Stop Losses and Trailing Stop Losses. Today we'll be focusing on the Trailing Stop Loss, what it is and how you can use it to maximise your chances of profiting.

A trailing stop-loss order is an intelligent version of a normal stop-loss, which is a limit sell that fills if the price dips below a certain point, preventing losses from happening. In a trailing stop-loss order, the sell price of your order follows (or “trails”) behind the current price of your chosen token, meaning that if the price moons and then unexpectedly drops, then the stop-loss would trigger at a higher price, meaning more profits for you.

Placing an order for 10 CAKE with a 10% trigger percent would allow the Stop Loss to follow the price of CAKE as it increases and then trigger a sell once the price retraces by that 10% against the new high. But of course, if the price simply drops by 10%, it will also trigger the stop loss.

A Trailing Stop Loss order is a more flexible trading tool than a fixed stop loss order, as it automatically tracks the asset price when it moves favourably, and does not have to be manually cancelled and setup again like a fixed stop-loss.

How to use BOG Trailing Stop Losses

  1. Simply visit the Stop Loss Page on Bogged.Finance and select “Trailing Stop Losses”.
  2. Ensure you hold 5000 BOG or equivalent priority.
  3. Select the token and the amount of the token you wish to protect with a trailing stop loss.
  4. Enter the trailing trigger percentage — the % change that is required negatively to sell.

A Trailing Stop Loss order requires the user to hold 5000 BOG or equivalent priority, the order lasts for 31 days before expiring and costs $5 per order in BNB.

Successfully Trading with Trailing Stop Losses

The key to being successful with a trailing stop loss, is to ensure your trade is neither setup so that the trailing trigger percent is not too wide or too tight. Placing a trailing stop loss that is too tight, could mean that your order is triggered simply by day-to-day movements that are natural within the market. But placing it too wide, could mean that while it isn't at risk of being activated by normal market variations, you could be exposing yourself to unneccessarily large losses, or giving up more profit than is neccessary. 

It's important to view the BogChart for that token and examine its typical movements to ensure how wide your want to set your Trailing Trigger Percent.