How Trailing Stop Orders Track Price and Trigger on Retracements

Summary

The document explains how trailing stop orders follow favorable price movement and trigger after a specified adverse move from a tracked extreme. The trailing distance is set in basis points. A buy order tracks a low and triggers after a rebound, while a sell order tracks a high and triggers after a pullback. The stop price is optional: when supplied, tracking begins only after the stop condition is met; otherwise tracking starts immediately.

It describes eligible stop loss and take profit order types, the exchange filter ranges that constrain the trailing distance, and how triggered limit orders enter the order book. Multiple worked examples show the tracking process for buy and sell orders, including how a new extreme resets the reference point. These examples clarify order mechanics, but do not provide evidence of trading performance. A triggered limit order may remain unfilled, and the document’s details are specific to the exchange API described.

Key ideas

• Trailing distance is specified in basis points and determines how far price must reverse from a tracked extreme to trigger an order.
• Sell orders track a high and trigger on a sufficient decline, while buy orders track a low and trigger on a sufficient rise.
• An optional stop price delays tracking until its condition is reached.
• Supported stop loss and take profit order types have above or below trailing distance limits set by the exchange filter.
• When a limit order triggers, it is placed in the order book and may not fill immediately.

Tags

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