Percentage Trailing Stops for Long and Short Positions

Summary

This document describes a percentage-based trailing stop for managing open long and short positions. The stop is recalculated from the current close: for a long position it moves upward as prices rise, and for a short position it moves downward as prices fall. A position exits when price reaches its stop. The accompanying example uses a configurable percentage and pairs the stop logic with moving-average crossover entries.

The document explains the intended trade-off: a wider percentage may allow more adverse movement, while a tighter one may trigger exits often. It suggests tuning the setting to market volatility and combining the trailing stop with other exit rules. It provides no performance results or comparative testing, and its prose describes tracking highs and lows even though the supplied implementation calculates from closing prices. The published example is a short backtest setup, so it does not establish how the approach performs across instruments or market conditions.

Key ideas

• A percentage trailing stop adjusts its exit level as price moves favorably.
• Long positions use a stop below price, while short positions use a stop above price.
• The example updates stops from closing prices and exits when the stop is reached.
• Stop distance trades off room for price movement against the risk of frequent exits.
• The document gives no evidence that a particular percentage performs well.

Tags

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