How to Use Spot Trailing Stop Order


How fast prices move can also affect the execution price. Trailing stops can only trigger during the regular market session. If the market is closed for any reason, trailing stops won’t execute until the market reopens.


If the stays the same or falls from the initial bid or highest subsequent high, the trailing stop maintains its current trigger price. If the declining bid price reaches, or crosses down through, the trigger price, the trailing stop triggers a market order to sell. The initial “high” is the inside bid when the trailing stop is first activated, so a “new” high would be the highest price the stock achieves above that initial value.

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You can use the Average True Range indicator to set a volatility based trailing stop. You can use the 50-period MA to ride the medium-term trend and the 200-period MA to ride the long-term trend. This causes many traders to give up and they’ll claim “it doesn’t work”. The My Trading Skills Community is a social network, charting package and information hub for traders.


how to use trailing stop limit stops are moved only when the price moves in your favour, but stay static if the price starts to move against you. Any information posted by employees of IBKR or an affiliated company is based upon information that is believed to be reliable. However, neither IBKR nor its affiliates warrant its completeness, accuracy or adequacy.


You’ll then see your order’s activation and submission time under and . If your order is triggered, the order status will be displayed as . You can check when your order was activated and submitted to the order book by clicking on . The order conditions will remain unchanged if it isn’t activated.

To create the trailing amount, place a sell order and then choose “trail” under order type. A trailing stock loss is an order that executes when the price of a security moves a percentage or dollar amount in a specified direction. A trailing stop limit order is designed to allow the investor to set a limit on the maximum possible loss without setting a limit on the maximum possible gain.

Is trailing stop a good strategy?

Trailing stops are effective because they allow a trade to stay open and continue to profit as long as the price is moving in the investor's favor. This may help some traders cope psychologically with volatile markets.

They simply change the price of their stop loss as the price moves. If the price instead were to drop to $19.80, the stop loss would drop to $19.90. If the price were to rise to $19.85, the stop loss would stay where it is. If the price were to fall to $19.70, the stop loss would fall to $19.80.

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As a result, the investor or trader is provided with greater flexibility finally profiting or limiting a loss. Example if i purcahse 100 rupees the trailing stop loss order, i would like to give 10 rupees , what i have to enter in trailing stop loss 10 or 90?. However, certain trading platforms allow to combine them with trailing capabilities to create a trailing stop limit for example. You can set the Trail to be either a dollar amount or a % of the current price.

Disadvantages of Trailing Stop Loss

An investor can avoid the risk of a stop order executing at an ETC unexpected price by placing a stop-limit order. A stop-limit order includes a limit price that requires the order to be executed at the limit price or better – but the limit price may prevent the order from being executed. Consider a long position where the stock is trading at $110, there’s a stop loss level of $100, and a stop limit level of $98. If the stock drops suddenly from $110 to $95, meaning that the price has dropped through the stop limit level, the position will not be closed.

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You can decide how long your trailing stop will be effective—for the current market session only or for future market sessions as well. Trailing stop orders that have been designated as day orders will expire at the end of the current market session if they haven’t been triggered. But good-’til-canceled trailing stop orders will carry over to future standard sessions if they haven’t been triggered. At Schwab, GTC orders remain active for up to 180 calendar days unless executed or canceled. A trailing stop order is a conditional order that uses a trailing amount, rather than a NEAR specifically stated stop price, to determine when to submit a market order.

  • It’s used mostly in technical analysis, but you’d be astounded at how powerful it can be when combined with fundamentals.
  • You are advised to revise your trailing stop strategy from time to time due to the constant price fluctuations in the market.
  • Trailing stop limits are available for all “Smart” routed stocks, options, and on all futures exchanges which currently support traditional stop orders.
  • This will change the price box to show LMT and you will also now see the STP and Trail boxes next to it.
  • You can use the 50-period MA to ride the medium-term trend and the 200-period MA to ride the long-term trend.

When the how to use trailing stop limit moves up by more than 5%, reaching or exceeding the trailing price of 8,400 USDT, a buy order will be issued to the order book. After the market order is submitted, it generally will result in an execution, but there’s no guarantee that you’ll get any specific execution price or price range. The resulting execution price may be above, at, or below the trailing stop’s trigger price itself.

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In contrast, Future Trailing Stop Order uses “callback rate”. For trailing stop sell orders, as the inside bid increases to new highs, the trigger price is recalculated based on the new high bid. When using a percentage for the trailing amount, remember that the actual point spread between the current price and trigger price will vary as the trigger price is recalculated. As with stop orders, different brokerage firms may have different standards for determining whether the stop price of a stop-limit order has been reached. Some brokerage firms use only last-sale prices to trigger a stop-limit order, while others use quotation prices. Investors should check with their brokerage firms to determine which standard would be used for stop-limit orders.

  • Moving Average can act as a “barrier” in trending markets so your stops can go beyond it to ride a trend.
  • A trailing stop-loss locks in the upside while also protecting you from the downside.
  • Please see the video below on how to use trailing stops.
  • Many online brokers provide this service at no additional cost.
  • It caps the amount that will be lost if the trade doesn’t work out but doesn’t cap the potential gain if the trade works in your favor.

However, its accuracy, completeness or reliability cannot be guaranteed. Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal. Stop Loss vs. Stop Limit Sometimes investing in the stock market can feel a little bit, “frothy”, per se, and when that occurs it’s nice to have something to fall… Are there cases where I’d lose out by doing this instead of a trailing stop limit?