Stocks & Commodities V. 27:7 (26-30): Trailing Resistance And Support Stops by Sylvain Vervoort

Stocks & Commodities V. 27:7 (26-30): Trailing Resistance And Support Stops by Sylvain Vervoort
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Trailing Resistance And Support Stops by Sylvain Vervoort

In this, the final part of a three-part series, we will look at a short-term trailing stop that moves close to the price action.

The different trailing stops I discussed in parts 1 and 2 allow for enough of a price reaction that makes them most effective for medium-term trend trading. Using lower percentages or a smaller multiplication factor for the average true range (Atr) trailing stop will mostly result in too many losing trades. If you want a short-term trailing stop, it will have to move much closer to the price action. With that in mind, I created Tr&nds, an acronym (more or less) for trailing resistance & support stop, which will look directly at the price movement. The most reliable reference is price support and resistance, and the main item here is price turning points.


I define a pivot support point in an up move when there is a low price that is equal or lower than the two prices preceding and following this low price. You can use the following MetaStock expression for this:

support:=If(L>=Ref(L,-2) AND Ref(L,-1)>=Ref(L,-2) AND Ref(L,-3)>=Ref(L,-2) AND Ref(L,-4)>= Ref (L,-2),Ref(L,-2),{else}

In Figure 1, you can see that this follows the uptrend in the Amd chart. But there are a couple of bigger price moves where the trailing stop stays too far away from the price action. How do we account for them?

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