Brief:
Traders need to adjust themselves to market's behavior but while maintaining stability: After opening a trade and setting the Stop-loss price, there are some things you might want to do and other actions that you might want to avoid.
What are your options?
1. A common rule of thumb states that once a Stop-loss price is set, it should remain at the same level or be modified only in the direction of profit (otherwise known as "trailing"), unless the trader has a clear understanding that he was wrong
2. If you choose to close the trade before it reaches the Stop-loss price – then make sure it is for the right reasons
Overview:
After setting up the Stop-loss price (considering your trading strategy, market volatility, risk level and duration) you are waiting for the market to move in the direction of your profit level. Now you are going to face 2 typical situations that could influence your Stop-loss:
1. The market is going in the direction you expected
In this case, all you can do is use the TRAILING STOP LOSS – whereby after setting your initial stop loss, you also insert an increment by which any move above that pip based increment, the stop-loss price will automatically increase for you. That way, with every increase in profit, your Stop-loss price is rising further and into a safe distance from purchase price. This is to make sure that even if the market changes direction you will be able to enjoy a profitable trade.
2. The market is going in the opposite direction
If the market goes against you, consider whether it is better to stick to your original SL or reevaluate and end your trade. Different traders have different strategies in this regard and each trader should find out what works best for him