Using trailing stops
A trailing stop is a stop loss that follows the price higher (or lower in the case of a short position) and helps to protect your profit in the case of a sudden price reversal. If you are not sure how far a trend may go, a trailing stop is a good way to ride the trend and protect your open profit. The following are three effective approaches to using trailing stops:
Moving averages offer a very easy-to-use method to apply a trailing stop. Simply find a moving average with a length that has followed the price action of recent trends without the price crossing it too many times.
If you are looking for a forex exit indicator, the ATR (average true range) may be the best indicator to exit a trade with. The ATR will rise and fall with volatility which means it adapts to the price action. One approach is to subtract 3x the value of the ATR from the highest price reached. Each time the price makes a new high, you move your stop loss to a price equal to the new high minus 3x the ATR. The ATR will change as volatility changes and keep your stop away from the noise, while still protecting your profits. You can also use Keltner Bands which combine a moving average with an ATR indicator.
Finally, you can use swing highs and swing lows to define a trailing stop. Prices seldom move in a straight line, rather forming trends that consist of a series of minor highs and minor lows. These are the swing highs and lows that define a trend. An uptrend is formed by a series of higher highs and higher lows, and a downtrend is formed by a series of lower highs and lower lows.
If you have a long position you can keep your stop just below the most recent swing low, and for a short position, you can keep it just above the most recent swing high. That way, when the trend starts to break down, you will automatically exit the trade.