Trailing Stop Orders: Mastering Order Types

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In the preceding example, the good trailing stop percentage uses a trailing stop percentage, but trailing stops are also available in dollar amounts. \nIn the preceding example, the investor uses a trailing stop percentage, but trailing stops are also available in dollar amounts. If you invest in a particularly volatile currency pair, the stop level may be triggered repeatedly – resulting in a series of small losses. The cost of opening further trades may also eat into your profits.

Do professional traders use trailing stop-loss?

Using a trailing stop loss is a great way to lock in profits or limit risk in an active market. In fact, professional futures traders frequently implement these strategies to optimize their capital efficiency in real time.

Note that in some cases only a portion or none of your order may execute if shares aren’t available at certain prices . Understanding order types can help you manage risk and execution speed. However, you can never eliminate market and investment risks entirely. It’s best to choose an order type based on your investment goals and objectives.

Indicator-Based Trailing Stop-Loss Method

Your order would be submitted based on the last price of $10.76. Assuming that the bid price was $10.75 at the time, the position would LTC be closed at this point and price. The net gain would be $0.75 per share, less commissions, of course.

This strategies works well but an investor needs to be disciplined and follow through on selling a stock if the alert is triggered. What happens if the market quickly switched from being bullish to being bearish. But this is different from the advice to stay in the roll a coaster and ride out the dip in the market. Next, you must be able to time your trade by looking at an analog clock and noting the angle of the long arm when it is pointing between 1 p.m. Now, when your favorite moving average is holding steady at this angle, stay with your initial trailing stop loss.

Bonus Trading Tip: How to capture a swing and ride massive trends (at the same time)

To avoid it, set your stop loss 1 ATR below the market structure. The market tends to “hunt” stop losses below Support or swing low. If you can endure the emotional swings, you’ll eventually catch a huge trend — possibly achieving a 1 to 20 risk to reward or more.

  • Trailing Stops by Trading Central is a volatility-adjusted algorithm for planning position exits.
  • Several indicators will plot a trailing stop-loss on your chart, such as ATRTrailingStop.
  • Rather than an automated order, the system will track the trailing stop and send an email when the price crosses that level.
  • Next, you must be able to time your trade by looking at an analog clock and noting the angle of the long arm when it is pointing between 1 p.m.
  • If the stock climbs to $130, the trailing stop order will sit at $120, meaning that at this point a guaranteed profit of $20/share is locked-in as a result of the trailing stop loss.

Ultimately, Trailing stop loss and Trailing stop-limit orders will give you the freedom to manage your risks during the unstable times of the crypto market. If you observe that the ordinary stop loss and stop limit orders only limit the specific amount of loss that you define while placing the order. But on the other side, placing trailing stop loss and stop limit orders will update your order values automatically to limit the maximum losses possible, and turn the whole trade profitable. A stop-loss is designed to limit an investor’s loss on a security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%.

Also, for portfolios in a Roth IRA, those aren’t penalized tax wise for selling early. I built this website when I was just a beginner myself. I’ve looked at every argument objectively, and I believe it has set myself and my readers up for the most success.

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If the good trailing stop percentage price reaches $4000, the order is triggered and will match the best available bids up to $4050. To prevent such cases, make sure to place trailing stops at a distance from the current price that does not expect to reach unless the market changes its direction. And, if the price falls to $39.70, the stop loss will fall to $39.80.

Example of a Trailing Stop

Placing the stop-loss too close to the market price may result in an early exit, whereas setting it too far away would mean risking more capital. A trailing stop, also called a trailing stop-loss, is a type of market order that sets a stop-loss at a specific percentage below an asset’s market price, rather than on a single value. The stop-loss then trails behind the stock as its price moves.

No one can predict the future, and so nobody is right all of the time. He is the most followed trader in Singapore with more than 100,000 traders reading his blog every month… There’s no best trailing stop strategy, nor is there a best stop loss strategy. Because it doesn’t consider the volatility of the markets. This causes many traders to give up and they’ll claim “it doesn’t work”.

Traders may enhance the efficacy of a stop-loss BNB by pairing it with a trailing stop. Gordon Scott has been an active investor and technical analyst or 20+ years.

I/we have no, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Michelle Jones is editor-in-chief for and a daily contributor for and has been with the sites since 2012. Previously, she was a television news producer for eight years. 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. A very rough way of valuing an asset because it ignores the intangibles.


If MEOW rises to the stop price ($105) or higher, it triggers a buy market order. MEOW will be purchased at the best price currently available. Your stop price will start at $115.50, which is 5% higher than the current price of MEOW. You want to buy MEOW, but you think it will fall in value and want to wait to purchase it.


But let’s assume the share price remains above the Trailing Stop price and rises to $14.00. The stop price is recalculated according to the value of the last trade price such that the Trailing Stop price now becomes $13.75 or $14.00 minus 25-cents. If shares in ticker AA continue to rise to $14.25, the Trailing Stop becomes $14.00. The Trailing Stop price will continue to adjust according to the last traded price until the stop is triggered and the order filled.

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