Understanding and Implementing Trailing Stops on Profit: A Comprehensive Guide with Source Code MT4

Introduction

In the world of trading, securing profits while managing risk is crucial for long-term success. One effective tool traders use to achieve this balance is the Trailing Stops on Profit. In this blog, we will delve deep into the concept of trailing stops, particularly focusing on how to implement a trailing stop on profit using Trailing Stops on Profit. This guide will provide a thorough understanding of trailing stops, along with detailed source code examples to help you automate this strategy in Trailing Stops on Profit

What is a Trailing Stops on Profit?

Trailing Stops on Profit is a dynamic stop-loss order that moves with the market price to lock in profits while protecting against losses. Unlike a traditional stop-loss, which remains fixed at a specific price, a trailing stop adjusts as the price moves favorably. This mechanism allows traders to secure profits as the market price advances and limit losses if the market reverses.

For instance, if you buy a currency pair at 1.1000 and set a trailing stop of 50 pips, the initial stop-loss will be set at 1.0950. If the price rises to 1.1050, the trailing stop moves up to 1.1000. If the price then falls, the trailing stop remains at 1.1000, ensuring you capture the profits.

Why Use a Trailing Stops on Profit?

Using a trailing stop can offer several advantages:

Profit Protection: As the price moves in your favor, the trailing stop follows, helping to lock in profits and prevent them from eroding if the market reverses.
Emotional Control: Automating the trailing stop process reduces emotional trading, as decisions are based on predefined rules rather than impulse.
Time Efficiency: Automated trailing stops save time by eliminating the need for constant manual adjustments.

Implementing Trailing Stop on Profit with Trailing Stops on Profit

In MQL4, implementing a Trailing Stops on Profit involves writing an Expert Advisor (EA) that dynamically adjusts the stop-loss as the market price moves. Below, we’ll walk through a complete example of how to code a trailing stop on profit using MQL4.

1. Setting Up the Environment Trailing Stops on Profit

Before you start coding, ensure that you have MetaTrader 4 and MetaEditor installed. MetaEditor is the integrated development environment used for creating and editing MQL4 scripts and EAs.

2. Creating a New Expert Advisor Trailing Stops on Profit

Open MetaEditor: In MT4, click on “Tools” -> “MetaQuotes Language Editor” or press F4.
Create a New EA: Go to “File” -> “New” -> “Expert Advisor (template)” and follow the wizard to create a new EA. Name it TrailingStopOnProfit.

3. Writing the Code

Here is a complete MQL4 code example for an EA that implements a trailing stop on profit:

mql4

//+------------------------------------------------------------------+

//|                                                 TrailingStopOnProfit.mq4 |

//|                        Created by YourName                                   |

//|                        https://www.yourwebsite.com                         |

//+------------------------------------------------------------------+

#property strict
// Input parameters

input double TrailingStop = 50;   // Trailing stop distance in pips

input double TakeProfit = 100;    // Take profit distance in pips

input double LotSize = 0.1;       // Lot size for trades
//+------------------------------------------------------------------+

//| Expert initialization function                                   |

//+------------------------------------------------------------------+

int OnInit()

  {

   Print("Trailing Stop On Profit EA Initialized");

   return(INIT_SUCCEEDED);

  }
//+------------------------------------------------------------------+

//| Expert deinitialization function                                 |

//+------------------------------------------------------------------+

void OnDeinit(const int reason)

  {

   Print("Trailing Stop On Profit EA Deinitialized");

  }
//+------------------------------------------------------------------+

//| Expert tick function                                             |

//+------------------------------------------------------------------+

void OnTick()

  {

   // Loop through all open orders

   for(int i = OrdersTotal() - 1; i >= 0; i--)

     {

      if(OrderSelect(i, SELECT_BY_POS))

        {

         // Check if the order is a buy or sell order

         if(OrderType() == OP_BUY || OrderType() == OP_SELL)

           {

            double currentPrice, stopLossLevel, trailingStopLevel;
            // Determine the current price and calculate stop loss level

            if(OrderType() == OP_BUY)

              {

               currentPrice = Bid;

               trailingStopLevel = currentPrice - TrailingStop * Point;

              }

            else

              {

               currentPrice = Ask;

               trailingStopLevel = currentPrice + TrailingStop * Point;

              }

// Adjust the stop loss if the price has moved favorably if(OrderType() == OP_BUY && Bid > OrderOpenPrice() + TrailingStop * Point) { if(Bid - TrailingStop * Point > OrderStopLoss()) { OrderModify(OrderTicket(), OrderOpenPrice(), trailingStopLevel, OrderTakeProfit(), 0, Blue); } } else if(OrderType() == OP_SELL && Ask < OrderOpenPrice() - TrailingStop * Point) { if(Ask + TrailingStop * Point < OrderStopLoss()) { OrderModify(OrderTicket(), OrderOpenPrice(), trailingStopLevel, OrderTakeProfit(), 0, Red); } } } } } } //+------------------------------------------------------------------+

4. Code Explanation

Input Parameters:
- TrailingStop: Specifies the distance (in pips) for the trailing stop.
- TakeProfit: Defines the distance for taking profit.
- LotSize: Sets the trade size.
OnInit() Function: Initializes the EA and outputs a message to the journal when it starts.
OnDeinit() Function: Outputs a message to the journal when the EA is removed or stopped.
OnTick() Function: This function is triggered on every tick (price update):
- Order Loop: Iterates through all open orders.
- Order Selection: Selects each order and determines its type (buy or sell).
- Price and Stop-Loss Calculation: Calculates the current price and adjusts the trailing stop level.
- Order Modification: Modifies the stop-loss level if the price has moved favorably.

Testing and Optimization

Backtest Your EA: Use MT4’s Strategy Tester to backtest the EA with historical data. This will help you understand how the trailing stop performs under different market conditions.
Optimize Parameters: Adjust the trailing stop distance, take profit level, and lot size based on your trading strategy and market conditions.

Common Issues and Troubleshooting

Trailing Stop Not Activating: Ensure that the Trailing Stops on Profit is attached to the correct chart and that trading is enabled.
OrderModify Errors: Check for error messages using GetLastError(). Common issues include incorrect parameters or insufficient funds.
No Orders Selected: Ensure that the orders are being correctly selected and that there are open orders to manage.

Advanced Techniques

Dynamic Trailing Stops: Implement more sophisticated trailing stops that adjust based on market volatility or other factors.
Combining with Other Strategies: Integrate trailing stops with other trading strategies, such as trend-following or breakout strategies, for enhanced performance.

Conclusion

Implementing a trailing stop on profit using MQL4 is a powerful way to manage trades dynamically and protect profits. By automating this process through an Expert Advisor, you can ensure that your trades are managed consistently, reducing emotional biases and saving time.

The provided source code serves as a foundational example. Feel free to customize and expand upon it to fit your specific trading needs and strategy. As always, thorough testing and optimization are crucial to ensure that your trailing stop implementation aligns with your trading goals.

Happy trading, and may your automated strategies bring you consistent success in the markets!