Trailing Stop Orders: What They Are, and How To Place One

What is a Trailing Stop order?

A Trailing Stop order is similar to a Stop-Limit order, but a Trailing Stop order’s trigger price will follow the market when it moves favorably and will sell or buy with a limit order when the market moves against you. This helps traders hedge against risk, including significant losses.

You set the Trailing Delta - the percentage of how much the market can move against you before you want to sell or buy. Therefore, you need to set your Trailing Stop order at a level that reflects your risk tolerance and market conditions.

For a Trailing Stop sell order, when the price goes up, the trailing price moves up along with the market price. 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 percentage you set.

For a Trailing Stop buy order, when the price drops, the trailing price moves down along with the last price. However, the trailing price will stop following if the price goes up; a limit buy order will be placed on the order book if the price moves more than the percentage you set.

Placing a Trailing Stop order

1. Hover over the Trade button and click on Spot Trading
   
   
   
2. Hover over Stop-Limit and click on Trailing Stop from the drop-down menu
   
   
   
   
3. Select your parameters:
   
   • Activation Price is an optional price you can set to trigger the Trailing Stop order. If no activation price is set, the activation price will be the market price by default.
   
   • Trailing Delta is the percentage of movement in the opposite direction you are willing to tolerate. The range you can set is 0.1% to 20%.
   
   • Limit price is required and determines the order price submitted to the market after the Trailing Stop order is executed as a limit order. To ensure your order is filled, set a price below the price at which your trailing delta will be activated (for sell orders) or above the price at which your trailing delta will be activated (for buy orders).
   
   • Amount is the amount of the asset you wish to allocate to this order.
   
   
   
   
4. Click Buy [...] to submit the order.
   
   

Examples

Placing a sell Trailing Stop order

The market price of BTC/USDT is 8,500 USDT, and you place a Trailing Stop order with the following parameters:

• Trailing Delta: 5%
• Activation Price: 8,500 USDT
• Limit Price: 8,600 USDT 

The trailing price is 8,075 USDT and the last price is 8,500 USDT. The trailing price will reach 15,200 USDT [Last Price* (1 - trailing delta)] when the price increases to 16,000 USDT.

The trailing price will stop when the price moves down. When the price moves to its peak price of 18,000 USDT, the trailing price reaches 17,100 USDT. When the price moves down, the trailing stop price stops again. When the price moves down by more than 5%, reaching or exceeding the trailing price of 17,100 USDT, a sell order (8,600 USDT) will be issued to the order book.

Note

Since the market price is 17,100, the sell order (8,600 USDT) will be filled immediately. The final sell price will be much higher than the limit price, with an 8,500 USDT profit. However, if you used a stop-limit order with the same parameters (stop price: 8,500 USDT, limit price: 8,600 USDT), the order will be filled at 8,600 USDT.

Placing a buy Trailing Stop order

The market price of BTC/USDT is 9,000 USDT, and you place a trailing stop order with the following parameters:

• Trailing Delta: 5%
• Activation Price: 9,000 USDT
• Limit Price: 8,900 USDT

The trailing stop price is 9,450 USDT and the last price is 9,000 USDT. The trailing price reaches 8,925 USDT [Last Price* (1 + trailing delta)] when the price drops to 8,500 USDT.

The trailing price will stop when the price rises. When the price moves to its lowest price at 8,000 USDT, the trailing price will be 8,400 USDT. When the price rises, the trailing price stops again. When the price moves up by more than 5%, reaching or exceeding the trailing price of 8,400 USDT, a buy order (8,900 USDT) will be issued to the order book.

Note

Since the market price is 8,400 USDT, the buy order (8,900 USDT) will be filled immediately. The final buy price will be lower than the limit price with 500 USDT saved. However, if you used a stop-limit order with the same parameters (stop price: 9,000 USDT, limit price: 8,900), the order will be filled at 8,900 USDT.

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