Adding a Peak-to-Trough Trailing Stop to a Stock Rotation Strategy
Summary
The article describes adding a trailing stop to a stock selection and rotation workflow. Its example sells a holding when the latest price falls more than 10% from the highest price observed since purchase. It recommends tracking stop-triggered stocks, checking holdings and issuing stop orders, then excluding stopped-out names from the regular rotation sell logic and from the next set of buys. These exclusions are intended to avoid accidentally creating short positions or immediately repurchasing a stopped stock.
The document is an implementation guide for a visual strategy template and backtest or simulation module; it gives no performance results or evaluation of alternative stop rules. It does not provide the actual peak-tracking code in the text, and the guidance depends on the platform's strategy structure. The example uses a fixed percentage drawdown, so it does not establish that this threshold suits other securities, timeframes, or trading costs.
Key ideas
- A trailing stop can sell a holding after its price falls by a chosen percentage from its post-entry peak.
- Track stopped-out instruments so later strategy steps can handle them consistently.
- Skip stopped holdings in the normal rotation sell logic to avoid unintended short positions.
- Exclude both rotation sales and stop-triggered sales from the next buy list.
- The article explains implementation flow but supplies no results validating the example threshold.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.