Trailing Stops for Long and Short Trades

Summary

This document describes a trailing-stop framework for long or short positions. A trade begins when its entry condition is met, with an initial stop set from the entry price. As price moves favorably by more than one percent relative to the most recently updated reference price, the stop is adjusted in the favorable direction. The position closes when price crosses the stop or a separate exit condition is met. The example sets the initial stop-loss parameter to three percent and includes a BTC-USDT futures backtest configuration spanning December 2022 to December 2023.

Entry and discretionary close conditions are placeholders that must be supplied by another strategy, so the framework alone does not define a complete trading signal. The document discusses the risk of stops being triggered by short-term noise and of partial profit-taking limiting gains, although the shown source does not clearly implement partial exits. No backtest results are reported. Stop execution, slippage, and the effect of the reference-price update rule are not evaluated in the material.

Key ideas

• The framework sets an initial stop when an entry condition opens a long or short position.
• After a favorable move exceeding one percent from the updated reference, it ratchets the stop in the trade's favor.
• A position closes when the market crosses its stop or a configured close condition occurs.
• Entry and close conditions are placeholders, so a separate signal method is needed to define the trades.
• The published material gives a backtest configuration but no performance results, and short-term price noise may trigger stops.

Tags

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