Dear Rahulg77,
As pointed out by Karthik in his answer to your question, trailing stop-loss is one of the ways to protect your profits (as well as capital), once prices start going up. I am giving below a formula that I use in MetaStock (as an indicator). I just move my stoploss figure to the one shown by this indicator. I call it SafeZone
I have derived it by reading "Come into my trading room by Alexander Elder", with some modifications. Expect everyone to comment on its usefulness as trailing stoploss.
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multiFactor:=Input("Enter factor of agressiveness",0.5,2,1.5);
stopLoss:=If(L>=Ref(L,-1),Ref(L,-1)+multiFactor*(L-Ref(L,-1)),Ref(L,-1));
Mov(stopLoss,9,E);
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Here, if you use higher factor of agressiveness, say 2, you will be able to lock-in max. profits but a little higher volatility during the day may square-off your long position. Generally, I have observed that a factor of 1.5 works very well.
As a rule, I enter long position only after the price (open/high/low/close) is above SafeZone, of course after looking at other details.
With regards,
Abhay (AAD)
