📖Stop-Loss | Take-Profit Guardrails

A powerful tool for managing risk, profit-taking, and emotions

Overview

• Dynamic Stop-Loss [SL] | Take-Profit [TP] Guardrails are a must-have feature for traders of all experience levels, including algo-traders.

• This feature helps traders to effectively time trade entries/exits, automate the calculation of stop-loss | take-profit levels, and stay in trades while price action remains inside its calculated normal volatility range.

• Due to its dynamic real-time update capability and utility as a trailing stop-loss | take-profit automation tool, this feature can be a powerful addition to both manual and algorithm [i.e., bot-based] trading systems.

• Toggle [SL | TP Guardrails] to view dynamic stop-loss | take-profit levels based on user-defined Length and Multiple settings. Length: number of periods considered in creating the Stop-Loss | Take-Profit distance. Multiple: a multiplier of the Average True Range [ATR] to adjust the Stop-Loss | Take-Profit distance from price values.

• Define the Length [default: 14] and Multiple [default: 1.5] to establish the desired dynamic stop-loss | take-profit parameters.

• Use the color selector boxes to change the Stop-Loss and Take-Profit guardrail colors.

Menu: Dynamic Stop-Loss [SL] | Take-Profit [TP] Guardrails

• A simple example trading technique using this feature is to go long when the guardrail transitions from above price action [i.e., resistance] to below price action [i.e., support]. Vice versa for short trades.

Traders monitoring a manual trade can move their stop-loss | take-profit level based on the calculated bull or bear guardrail.

Example 1: Dynamic Stop-Loss | Take-Profit Guardrails

TradingView: Dynamic Stop-Loss | Take-Profit Guardrails; click image to enlarge

Traders using a 3rd-party bot-trading platform [e.g., 3Commas, Cryptohopper] can set up a webhook within a TradingView alert to automate their trade based on price action crossing the dynamic stop-loss | take-profit threshold.