Trailing Stops from the Previous Candle’s High or Low
Summary
The document outlines a candle-based trailing stop rule. The routine checks for a newly formed candle and then adjusts the stop in the favorable direction using the previous candle’s low for a long position or its high for a short position. This makes the stop reference the prior bar rather than the current bar, and the stop is described as moving only in the direction that protects or locks in profit.
The description is a brief explanation of a library function, not a complete trading strategy. It gives no entry rules, stop initialization method, bar timeframe, gap handling, or empirical results. It also does not specify whether the stop is updated at candle close or how an execution system handles a price crossing the stop between candles. The rule can be understood as a simple volatility-sensitive trailing approach, but its behavior and suitability depend on implementation and market conditions.
Key ideas
- For a long position, the trailing stop follows the low of the previous candle.
- For a short position, the trailing stop follows the high of the previous candle.
- The stop is intended to move only in the position’s favorable direction.
- The description does not specify entries, initial stop placement, execution timing, or tested results.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.