Adaptive Long and Short Trailing Stops from Recent Highs and Lows

Summary

This document describes a price-based trailing stop that updates from recent candle highs, lows, and closes. It defines separate offset distances for long and short positions. When price crosses the prior stop, the rule can reset the stop around the close; otherwise it ratchets the stop using the latest high or low while preserving the prior stop boundary. If neither crossing condition applies, it sets the stop to the close. The stated default offsets are 228.5 points for longs and 243.5 for shorts.

The explanation presents this as a stop-loss component that can be integrated with another strategy, though the supplied source also generates long or short entries from whether the stop is above or below price. Backtest settings identify BTC-USDT futures over roughly a year, but no performance statistics are reported. The document notes that large offsets can permit bigger losses, small offsets can trigger early exits, and the first candles after entry may have wider risk. It recommends testing offsets by instrument and considering limits on early adjustments; a trailing stop cannot prevent losses from sudden extreme moves.

Key ideas

• The stop level is recalculated from recent highs, lows, closes, and separate long and short offsets.
• When price advances, the stop ratchets while a maximum or minimum rule prevents it from moving back in the wrong direction.
• The stated default stop distances are 228.5 points for longs and 243.5 points for shorts.
• The prose frames the method as a stop tool, while the source also derives directional entries from the stop's position relative to price.
• Offset choice and early post-entry behavior affect risk, and the document reports no backtest performance statistics.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.