Increase your success with the Trailing Stop feature

There are situations when an asset’s price moves up significantly but “guessing” the top as a Take Profit target is hard. Let’s look at an example:

–  You decide to enter a trade during an expected price rally

–  Not knowing where the top is, it is hard to establish the resistance and support levels

–  This situation is quite common in the crypto market – for example, BTC rallied to a 35% gain on October 25

The solution to capturing as much of the rise as possible while protecting against a potential price reversal is the Trailing Stop setting available on 3commas but not on most exchanges.

How does the Trailing Stop work?

A trailing stop is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving up. A trailing stop is a stop order that can be set at a defined percentage away from a coin’s current market price. The order closes the trade if the price changes direction by a specified percentage.

For clarity, let’s look at an example on the chart.

Suppose you enter into a transaction at the level shown by the blue line, and the coin’s price begins to rise to the level shown by the red line. As we don’t know whether the price will continue to rise, a 20% trailing stop will allow you to secure profits at the green line level. Profitable, convenient and with downside protection.

In order to use this on 3commas , just enable and configure the Trailing Stop feature in the Smart Trade menu section:

The slider sets the trailing value in percentage points away from the current price. When the price of the coin goes up, the Stop Loss also moves up by the chosen percentage. When the price of the coin goes down, the Trailing Stop does not move and the Stop Loss triggers a Sell order so you can lock in profits.

Configure Trailing stop

Conclusion: The Efficacy and Importance of the Trailing Stop Feature in 2023

In the ever-evolving landscape of financial trading, ensuring optimal outcomes while minimizing potential risks is paramount. The introduction of trading tools and features like the Trailing Stop, particularly as offered by platforms like 3Commas, has brought about a transformation in how investors approach trades. The underpinning principle of this tool centers around capitalizing on positive price movements and safeguarding traders from abrupt and unforeseen market downturns.

The inherent unpredictability of asset prices, especially in the realm of cryptocurrencies, poses challenges. Traders often grapple with determining the peak or optimal selling point, especially during price rallies. The unpredictability becomes more pronounced given the dynamic nature of factors influencing these price movements, from market sentiments to geopolitical events. The beauty of the Trailing Stop feature lies in its adaptability to these changing conditions.

The functionality of the Trailing Stop is elegantly simple. It allows trades to persist and potentially accrue value so long as the price trajectory remains favorable. By establishing a predefined percentage for the stop, traders essentially create a safety net. This ensures that should the price of the asset experience a downturn, the system initiates a sell order, thus preserving the accrued value.

The illustrative example of a coin's price trajectory, from its entry (blue line) to its potential peak (red line), underscores the Trailing Stop's significance. The green line, indicative of the position where gains are secured given a 20% trailing stop, represents the sweet spot between ambition and prudence. The trade is allowed breathing room to potentially reach new heights, but not at the peril of losing significant value.

3Commas' integration of the Trailing Stop in its Smart Trade menu section is a testament to the tool's importance and growing popularity among traders. The intuitive slider mechanism, which defines the trailing value as a percentage, further simplifies the process for users. It's a proactive approach, ensuring that as the coin's price escalates, so does the Stop Loss, echoing the upward movement. Conversely, in a declining market, the Trailing Stop remains static, acting as the guardian of the trader's interests by triggering a sell order at the right moment.

In the span of four years, from the original date of publication in 2019 to 2023, the trading world has experienced manifold changes. The volatility of markets, especially in the domain of cryptocurrencies, has only amplified. Against this backdrop, the Trailing Stop feature's role is not just relevant but critical. For both seasoned traders and novices, it serves as a compass, navigating through the tumultuous waves of price fluctuations.

In sum, as we move forward in 2023, tools like the Trailing Stop offered by 3Commas become not just auxiliary aids but essential components of a trader's toolkit. They exemplify the fusion of strategy and technology, ensuring that traders can pursue ambitious returns without being blindsided by the unpredictable winds of the market. As the trading ecosystem continues to evolve, embracing and mastering such tools will be pivotal for sustained success in the realm of digital assets and beyond.