of the Alchemy Trailing Stop Indicators are self-adaptive and are designed to
capture the majority of any substantial move in the market, while providing
adequate protection in the case of a major trend change. The Alchemy
Trailing Stop Indicators use logical areas in the market to set stops. The
use of logical stops is considered one of the most critical aspects of
Many traders set stops by risking a certain predetermined
percentage of the entry price. As price continues to make
new highs, in the event of a long trade, or new lows in the
event of a short trade, the Percent Trailing Stop indicator
will recalculate the stop based on that new high or new low
made in the market. This indicator can
be used as a multi level percent profit trailing stop and it
has the option of either tightening up stops or widening stops
as the position profit increases. This is a very popular stop method used
by many stock traders.
Volatility Stop is predicated on the principle that volatility
in the market, to some extent, represents noise in the market.
The primary idea is to determine the noise in the market and
then place the stop level just outside the immediate noise
in the market. The Volatility Stop uses a multiple of the
volatility of the market expressed as a multiple of the average
true range of the market. The Volatility Stop allows the trader
to adjust the sensitivity of the market noise filter.
We include 2 separate trailing stop indicators with this
trailing stop method, the Alchemy Volatility Stop and the
Alchemy Auto Volatility Stop indicator, which automatically
changes directions based on the market trend.
The Pivot Stop is based on identified support and resistance
levels created by actual market action. A long Pivot Stop
would be trailed up as new support pivots are created by market
action. A short Pivot Stop is trailed down as new resistance
pivots are created by the market. Support and resistance levels
are used in many ways by successful traders. Using support
and resistance levels as stop loss points is a logical use
of the support and resistance levels concept.