Trailing Stop allows a varying stop (price at which an order is triggered) as the stock price changes. In the example below (picture taken from the moomoo app), the trigger price for a sell order is set at a trailing ratio of 10% below the stock price. When the stock price increases to $130, the stop also increases to $117. When the stock price decreases, the stop remains at the previous stop of $117. The stop rises to $126 when the price rises to $140.
Thespread/limit offsetis basicallythe differencebetweenthemarket price when the order is triggeredand thelimit price. Recall that orders will not be filled if the market price is poorer than the limit price (i.e. lower than the limit price for sell orders and higher than the limit price for buy orders).
A spread/limit offset of 0.5 means the limit price of a sell order is $116.50 if the trigger price is $117. The risk is if the price falls very quickly when the order is triggered, the order will not be filled.
For a buy order, the reverse is true. For example, the current stock price is $10 and you want to set the trigger price at a trailing ratio of 10% above the stock price i.e. $11. When the price falls to $9, the trigger price falls to $9.90. When the price increases to $12, the stop does not change and remains at $11.
A spread/limit offset of 0.5 means the limit price of the buy order submitted is $11.50 if the trigger price is $$11.
Comparing Trailing Stop Limit with Trailing Stop Market
A market order will be sent once the trigger price is reached. This means the price at which a sell order is filled will not be within the seller’s control. If the price drops very quickly, the filled price for a sell order can be very far below the trigger price. The reverse is true for a buy order. If the price rises very quickly, the filled price for a buy order can be very far above the trigger price.
The picture below is taken from the moomoo app.
PS: I am not a moomoo staff. The above sharing is based on my personal understanding and is not financial advice.
Dadacai
OPAlways Hungryy
:
@Always HungryThe spread is 0.5 if the lowest price you are willing to sell below the stop/trigger is 50cts below that. When the order triggers at the stop, the market price may fall a lot below the stop so trailing stop limit allows you to set the maximum difference below the stop you are willing to sell at. Do you understand what trailing ratio is?
Always Hungryy
Dadacai
OP
:
OK I understand. So in the example spread was 0.5, meaning when the pricing drops from 140 to 126, then it will trigger an order limit anywhere from 126 down to 125.50. Correct?
Always Hungryy
Dadacai
OP
:
OKOK, the perhaps the page coule be explained better by writing spread 0.50 is the price 126 down to 125.50. So the dummies like me geddit :)
Dadacai OP : @Always Hungry
Always Hungryy Dadacai OP : thanks dude. I saw this before, but don't understand practically how it works?
Dadacai OP Always Hungryy : You’re welcome.
Always Hungryy : so boss in the example how do they calculate the spread? where does the 0.5 come from?
Dadacai OP Always Hungryy : @Always HungryThe spread is 0.5 if the lowest price you are willing to sell below the stop/trigger is 50cts below that. When the order triggers at the stop, the market price may fall a lot below the stop so trailing stop limit allows you to set the maximum difference below the stop you are willing to sell at. Do you understand what trailing ratio is?
Always Hungryy Dadacai OP : OK I understand. So in the example spread was 0.5, meaning when the pricing drops from 140 to 126, then it will trigger an order limit anywhere from 126 down to 125.50. Correct?
Dadacai OP Always Hungryy : Yes![clap 👏](https://static.moomoo.com/nnq/emoji/static/image/img-apple-64/1f44f-1f3fb.png)
Always Hungryy Dadacai OP : OKOK, the perhaps the page coule be explained better by writing spread 0.50 is the price 126 down to 125.50. So the dummies like me geddit :)
Dadacai OP : @milliondollar
TuoyoNiks : Thanks bro, good men.
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