Trailing Stop Order: What It Is & How It Works

risk of losing

If 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. One thing I might note is that sometimes you will get gigantic candles in your trade’s direction. In that case, the trailing stop you’re using may be tighter than setting a stop at the previous candle’s close. This means if you want to ride a short-term trend, you can trail your stop loss with a 20-period Moving Average — and exit your trade if the price closes beyond it. An exit point is the price at which a trader closes their long or short position to realize a profit or loss.

Trailing stop XRP limits are available for all “Smart” routed stocks, options, and on all futures exchanges which currently support traditional stop orders. Keep in mind, short-term fluctuations in a stock’s price can trigger a trailing stop order. Also, you aren’t guaranteed a price with a trailing stop order.

Step 3. A Static or a Trailing Stop?

You cannot completely avoid all trading losses by using Trailing Stop Orders. You can also use a Stop Loss,Sell Limit, or Stop Limit. Your trade will stay open for as long as the price doesn’t go against you by 50 pips. Can help protect potential profits while providing downside protection. Stoploss values cannot be changed if trailing_stop is enabled and the stoploss has already been adjusted, or if Edge is enabled .

  • Please note that the orders on the order book are filled in chronological order.
  • Your trade will stay open for as long as the price doesn’t go against you by 50 pips.
  • Therefore, a stoploss of 10% on a 10x trade would trigger on a 1% price move.
  • There is no ideal optimal trailing delta and activation price.
  • And this is something most traders never get to experience because “it doesn’t work” for them.

JeFreda R. Brown is a consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career. She is the CEO of Xaris Financial Enterprises and a course facilitator for Cornell University. We give calls from Monday to Friday in suggested intervals. In case we couldn’t get through, we will try again at the same time the next day.

Trailing Stop Orders Short Video

If the market goes against the profitable direction, it may eventually reach the Stop Loss level pre-set by Trailing Stop. Once the price reaches this level, the position is closed. Trailing stops help to lock in profits while keeping the trade open until the instrument’s price hits your trailing stop level.

For a long trade, the selling price is supposed to be higher than the last price. When the price goes up, the trailing price moves up along with the last price and keeps a certain percentage interval. However, the trailing price will stop following if the price drops. A limit sell order will be placed on the order book if the price moves more than the predetermined trailing delta from its highest price and reaches the trailing price. Before we dig deeper into trailing stops, it’s important to draw a distinction between stop loss and pending orders.

All stoploss properties mentioned in this file can be set in the Strategy, or in the configuration. Most of the strategy files already include the optimal stoploss value. Trading 212 Markets Ltd. is authorised and regulated by the Cyprus Securities and Exchange Commission (License number 398/21). Enable the Trailing Stop order and set your desired distance.

What Are Trailing Stops Used for?

A trailing stop is often used by traders who want to either lock their profits to the upside or to prevent extending losses to the downside.

The stop-loss then trails behind the stock as its price moves. A stop-loss order is an order typethat helps manage risk by specifying a point at which your trade should be closed if the price moves against you. The key benefit of using a stop-loss is that it ensures your losses are limited. Stop-loss orders remain in effect until your position is liquidated or you choose to cancel the order. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Trailing stop loss orders can also be set in percentage terms. If a stock is purchased at $100 with a trailing stop level of 10%, the stop loss level will initially stand at $90. If the stock rises to $130, the stop loss price will have risen to $117, or 10% below the highest price realized while the position is on. To set an automatic Trailing Stop in MT4, right-click an order in the terminal window, choose “Trailing Stop” and pick the desired size of a Trailing Stop.

The Hardest Job in Trading: Setting Stops – RealMoney

The Hardest Job in Trading: Setting Stops.

Posted: Sat, 25 Feb 2023 15:00:00 GMT [source]

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How to view your current Trailing Stop?

Trailing stop loss orders can enable traders to remove emotions from their trade. It’s important to remember that a stop loss level doesn’t guarantee execution at that price. 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. These days, I’ve found that the trailing stop hasn’t worked for me as a value investor who buys stocks that can take a while to recover . Simply because stocks have much more volatility during intra-day compared to end of day prices.


Your stop distance will continue to be adjusted every time the DAX 40 moves a further five points. Many trading platforms feature trailing stops, and the widely-popular MetaTrader platform is no exception. To place a trailing stop with MetaTrader 4 or 5, simply right-click on the open position, select Trailing Stop from the drop-down menu and select the number of pips to trail the price. Trailing stop can be disabled by setting “None” in managing menu. And trailing stops of all open positions and pending orders will be disabled if the “Delete All” command of the same menu has been executed.

  • I’m telling you, sometimes the stock market can be brutal.
  • It’s not just during times like the Great Depression either.
  • When a position encounters a positive market, the trailing stop adjusts and optimizes the stop established by moving it up or down.
  • For example, if your equity is $1000, you can afford losing $10 on, let’s say, buying EUR/USD.

Considering they receive millions of orders a day, why wouldn’t they manipulate the order of processing buy/sell orders to increase their transaction fee take. Most investing beginners aren’t aware that the market goes into a recession every years. It’s not just during times like the Great Depression either. Trailing stop-losses will only move if they reduce risk, and they will never increase your risk beyond your original stop price.


The size of this stop depends on the size of volatility at the market. If the volatility is high and price makes big swings, a trader needs bigger Stop in order to avoid getting stopped out. In case of lower volatility, a trader places smaller Stops. Volatility can be measured with help of such indicators as Bollinger Bands.

trailing stoploss

Match ideas with potential investments using our Stock Screener. Make sure to have this value lower than minimal ROI, otherwise minimal ROI will apply first and sell the trade. The bot cannot do these every 5 seconds , otherwise it would get banned by the exchange.

You set a trailing stop order with the trailing amount 20 cents below the current market price. To do this, first create a SELL order, then select TRAIL in the Type field and enter 0.20 in the Trailing Amt field. The trailing amount is the amount used to calculate the initial Stop Price, by which you want the limit price to trail the stop price. Trailing stop-loss placement is usually specified by setting a price the desired distance away from the market price, in line with how much capital you’re willing to risk on the trade.

There’s no rule to say you must either capture a swing or ride a trend. It’s a matter of time before the market reverse and COLLAPSE. To avoid it, set your stop loss 1 ATR below the market structure.

how to set a trailing stop loss 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. This will now activate an algorithm, which automatically moves the stop loss up every time the price of your asset increases.

A trailing stop limit order is designed to allow an investor to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. The limit order price is also continually recalculated based on the limit offset. A “Buy” trailing stop limit order is the mirror image of a sell trailing stop limit, and is generally used in falling markets. When the trailing delta is too small or the activation price is too close, the trailing stop is too close to the entry price and is easily triggered by regular daily market movements. There is no room for a trade to move in the favorable direction before any meaningful price moves occur.