How to Use Spot Trailing Stop Order

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6.3 After the stop order is triggered, whether it is filled or not, the trigger conditions will not be effective again. In connection with a ’trailing price increase’ and a ’Buy’ you can catch trend reversals with a better entry price compared to the regular ’current live price’ value. Assuming the price now drops 10% from $1,400, reaching $1,260, the rule will sell.

How Does a Trailing Stop Work?

When the price of a security with a trailing stop increases, it ”drags” the trailing stop up along with it. Then when the price finally stops rising, the new stop-loss price remains at the level it was dragged to, thus automatically protecting an investor’s downside, while locking in profits as the price reaches new highs. Many online brokers provide this service at no additional cost.

”Above the market” refers to an order to buy or sell at a price higher than the current market price. A trailing stop is more flexible than a fixed stop-loss order, as it automatically tracks the stock’s price direction and does not have to be manually reset like the fixed stop-loss. If there’s no market for the stock (meaning there’s no bid or no ask available) or if the stock itself is not open for trading, the market order triggered by your trailing stop can’t execute. 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.

Why use trailing stop orders?

In order to help minimize the potential costs, you can set the trail to 5%. Here, your stop price will always remain 5% above the lowest price of ABC. Once it moves to lock in a profit or reduce a loss, it does not move back in the other direction.

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With the Trailing Buy, the rule will continue to adjust the Buy price to $250 above the current price. If BTC drops to say $42,000, the new buy price will be $42,250. Should the down trend now reverse and BTC go up by $250 to $42,250, the rule will buy back 100% of the amount you sold. When an order is triggered, a green tick will appear beside .

She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She lives in the Chicago area with her son, dog and two cats. 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 .

1  Buy trailing stop order

An explanatory brochure is available upon request or at Our clearing firm, Apex Clearing Corp., has purchased an additional insurance policy.. Click here to see animation graphics for a better understanding. When your sell-stop is executed, place a stop loss above the High of the recent up-trend . The rules below are based on Screen 3 of the Triple Screen trading system, described by Alexander Elder in Trading for a Living.

There are two broad types of orders in the financial market. First, there is a market order, in which you ask the broker to initiate the trade at the exact moment. This is the most common type of order among most new traders. Without using the trailing functionality here, the rule would have triggered at a higher price of $1,323. To come back to the previous example, if BTC were to start dropping, the rule would sell at $46,300, making sure you secure a profit above the price of $45,450 at which you had bought in. This move will have increased your Trailing Stop limit to $46,300 – maintaining a distance of $250 from your new position.

A trailing stop is a stop order and has the additional option of being a limit order or a market order. Trailing stops can provide efficient ways to manage risk. If MEOW falls to $100, the stop price will update to $105, 5% above the new lowest price. The sell-stop is reached, the stop-loss will be placed as shown.


You want to buy MEOW, but you think it will fall in value and want to wait to purchase it. You also think that if MEOW goes up by a defined amount (let’s say 5%) it may go even higher. In an attempt to help minimize potential costs, you set your trail to 5%. Your stop price will always remain 5% above MEOW’s lowest price.

The buy trailing stop is called a trailing stop-loss because the sell point rises along with (i.e., trails after) the stock price. If you bought Pretty Good Company’s stock price at $1.00 and set your initial stop-loss at 90 cents, your stop-loss would be 10 percent. If you used the trailing stop-loss strategy and PGC’s stock price rose to $1.10, your new stop-loss … When using a stop-loss, you decide upon a certain price that you do not want to go below, and create an order to sell the stock if it trades at that price.

But if the stock price moves up to $200, the trigger price for trailing stop comes along with it. At a price of $200, the trailing stop will only trigger a sale if the asset price drops below $180. Trailing stop orders also work in a similar way and are set relative to the price of a crypto asset at the points of entry or exit a trade. For a long position, the trader places a trailing stop loss order below the current market price of the asset by a fixed price or the percentage.

The stop price is not the guaranteed execution price for a stop order. The stop price is a trigger that causes the stop order to become a market order. The execution price an investor receives for this market order can deviate significantly from the stop price in a fast-moving market where prices change rapidly. An investor can avoid the risk of a stop order executing at an unexpected price by placing a stop-limit order.

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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. For sell orders that use a percentage as the trailing amount, the point distance between the security’s price and the trigger price will widen as prices move higher. 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.

A standard stop-loss is and will be implemented when a stock drops or rises to where the order has been placed. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 86% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Margin trading involves interest charges and heightened risks, including the potential to lose more than invested funds or the need to deposit additional collateral.

  • Trigger orders on popular cryptocurrency exchanges and trade 24/7.
  • Here he could set a trailing stop on ETH which will automatically sell if the price dips more than $20 below the market price.
  • A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order.
  • Suppose a trader bought ETH worth $100 and decides he doesn’t want to lose more than $20 on his trade.

In this case, it means that the stock can move lower by about 30 points before being stopped. The limit orders mentioned above are also known as conditional orders. This means that the order will only be placed if the price of an asset reaches a certain level.

However, if BTC continues to go up, the Trailing Stop will follow. Let’s assume the price of BTC reaches $45,000, the sell price would be $44,750. When an investor is long a stock, a trailing stop loss reflects a sell order. When an investor holds a short position and expects a stock to fall, a trailing stop loss reflects a buy order. This gives the trade room to move but also gets the trader out quickly if the price drops by more than 12%.

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This helps lock in any potential profit, as the stop-loss follows the trajectory of the market price as it moves in your favour, while limiting risk by capping the potential downside. Deciding how to determine the exit points of your positions depends on how conservative you are as a trader. Shrewd traders always maintain the option of closing out a position at any time by submitting a sell order at the market. Using a 10% trailing stop, your broker will execute a sell order if the price drops 10% below your purchase price.

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Conversely, the activation price must be higher than the market price to place a sell trailing order. As soon as you submit your order, the price of XYZ starts to rise and hits $62.00. The stop price has adjusted accordingly and is at $61.80, or $62.00– the $0.20 trailing amount. Your limit price has also adjusted accordingly and is calculated as $61.70, or 61.80 – the 0.10 limit offset.

What is a buy stop vs buy limit?

What is the difference between a Buy Stop and a Buy Limit? With a Buy Stop Order you set the Price higher than the current market price. With a Buy Limit Order the limit price is always lower than the current market price, not higher.

The trailing amount, designated in either points or percentages, then follows (or ”trails”) a stock’s price as it moves up or down . Different brokerage firms have different standards for determining whether a stop price has been reached. Some brokerage firms use only last-sale prices to trigger a stop order, while others use quotation prices.


We only tried to explain how to place a trailing stop order. You can use both technical analysis and fundamental analysis . Having conducted your research and come to this conclusion to buy 1,000 coins at $43, with the intention of holding it for a few days XLM or weeks. The best way to see how effective such an order can be is to look at another trailing stop order example below. The offers that appear in this table are from partnerships from which Investopedia receives compensation.