Risk Management is an important part in the system development process. Forex Strategy Builder has a number of unique ways to assign risk controls, including a trailing stop limit, basic stop loss, day / night stop loss, and reversal stop. Each characteristic or parameter within the stop can be customised and adapted.
Trailing Stop Limit
The trailing stop limit allows the user to have a system, which when profitable locks in gains by sliding the stop loss higher. In effect, if a trade is in profit, the system will calculate the degree of difference between the current price and the trailing stop limit level. This stop ‘distance’ will be kept at all times and will only change if the position continues to be profitable. If the trade turns negative, then the trailing stop limit will lock in at the current level. An effective way of not limiting profit potential, the trailing stop limit can also be used as a take profit setting. The Trailing Stop Limit is a custom indicator and must be downloaded separately. Please contact your account manager for further details.
Basic Stop Loss
The default setting on the Forex Strategy Builder is the basic stop loss. This parameter allows the user to specify a level that he/she wishes to trade out of in the event the position turns into a loss. The basic stop loss can be set by choosing the strategy properties tab in the middle of the FSB interface. When generating a strategy, please ensure that the box is ticked if using the Stop Loss.
Day / Night Stop Loss
The day / night stop loss is relatively straight forward in its interpretation. In effect the online forex trader can set a stop out level or time on a trade. The time could be set to go off each day at a specific session time or period. This can also help traders to stopping overnight position and weekend holds. To set the day night stop loss please choose the indicator from the closing position logic button on the strategy.
The final stop loss type that can be effectively used on the Forex Strategy Builder terminal is the Reversal Stop. When a trader sets his or her stop loss levels, they can also choose to close a position if a reversal signal is found. For example, if a position is opened because the moving average indicators meet the set conditions or trading guidelines, then the position can also be closed if the system generates an opposite position. This has become quite popular with traders. Care however must be taken, when using this setting. It can be found in the strategy properties window.
For more information on the above parameters please visit Vantage FX.