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Trailing stop order

A trailing stop order allows investors to set a 「trailing amount」 or 「trailing ratio」 so that the system continually calculates the stop price as the market fluctuates. When the stop price is hit, a buy/sell market order will be submitted. A Stop order is not guaranteed a specific execution price and may execute significantly away from its stop price.

The order follows the "buy high and sell low" rule. The trailing amount or ratio should be greater than 0.


1. Examples

1.1 Buy trailing stop order

Assuming stock XYZ has a current price of 10, you submit a buy trailing stop order with a 50% trailing ratio. So, the order's initial stop price will be 15 (10+10*50%). When the market price falls, so does the stop price; when the market price rises, the stop price doesn't change. A buy market order will be submitted as soon as the stop price is hit.

Before the buy order fills, if XYZ's market price falls to as low as 8, the stop price will be adjusted to 12 (8+8*50%). When XYZ's market price rises to 12 or higher, a buy market order will be submitted automatically to the clearing broker and filled at the market price (the transaction price is not guaranteed). 

1.2 Sell trailing stop order

Assuming stock XYZ has a current price of 20, you submit a sell trailing stop order with a trailing amount of 5. So, the order's initial stop price will be 15 (20-5). When the market price rises, so does the stop price; when the market price falls, the stop price doesn't change. A sell market order will be submitted as soon as the stop price is hit. 

Before the sell order fills, if XYZ's market price rises to as high as 30, the stop price will be adjusted to 25 (30-5). When the price falls to 25 or lower, a sell market order will be submitted automatically to the clearing broker and filled at the market price (the transaction price is not guaranteed). 


2. Order time 

Clients can place trailing stop orders at any time via the app. 


3. Time-in-force 

Clients can set a trailing stop order's time-in-force. If the order is not filled in full during the validity period, the unfilled portion will be cancelled automatically by the system. 

If the order fails to be executed due to risk management or other reasons, it will be in "Failed" status, and the system will not continue to place a market order.


4. Trigger time

If a trailing stop order meets the trigger condition during the preset trading period, it will be triggered and the system will automatically submit a preset order to the clearing broker.

The trailing stop order will not be triggered if the trigger condition is met outside the preset trading period.


5. Stop price

5.1 Buy trailing stop order

● If a trailing amount is set,

Initial stop price = initial market price + trailing amount

Adjusted stop price = lowest market price before order is triggered + trailing amount

● If a trailing ratio is set,

Initial stop price = initial market price * (1 + trailing ratio)

Adjusted stop price = lowest market price before order is triggered * (1 + trailing ratio)

5.2 Sell trailing stop order

● If a trailing amount is set,

Initial stop price = initial market price - trailing amount

Adjusted stop price = highest market price before order is triggered - trailing amount

● If the trailing ratio is set,

Initial stop price = initial market price * (1 - trailing ratio) 

Adjusted stop price = highest market price before order is triggered * (1 - trailing ratio)


6. Explanations and notes

6.1 After a trailing stop order is triggered, there is no guarantee that a market order will be successfully placed due to reasons such as insufficient buying power or positions.

6.2 After a trailing stop order is triggered, the system will place a market order automatically. However, there is no guarantee that it will be filled. If the order is not filled during the time-in-force, it will be cancelled automatically by the system.

Please keep in mind that:

(1) After a trailing stop order is triggered, Futu AU will submit a market order to the Hong Kong Stock Exchange at the five best bid or ask prices according to the buy or sell instruction.

(2) A market order may be divided into several small orders for execution, and each small order may be filled at a different price.

(3) If the number of orders in the order book is small, a market order may not be fully filled. The unfilled part will be automatically cancelled and, after being cancelled, will be in "Cancelled" status.

(4) If the liquidity of a stock is poor or there is no order in the order book for the time being, a market order may not be filled and will be automatically cancelled. After being cancelled, it will be in "Cancelled" status.

(5) A market order is not guaranteed a better execution price. In particular, a market order may be filled at a higher or lower price when the market changes rapidly.

(6) During the trading hours after the Morning Session or the Afternoon Session has just opened, there may be a greater chance that transaction prices will deviate since orders that have accumulated before the market opens need to be processed.

(7) For the sake of risk management, the price of a pending market order is calculated as the current price * 1.2. Your buying power will be reduced accordingly. After the order is filled or cancelled, the frozen part of your buying power will be released.

6.3 After a trailing stop order is triggered, whether it is filled or not, the trigger conditions will not be effective again. Please place a new order if necessary.

6.4 After a trailing stop order is triggered, the system will place a market order. For clients' convenience, the order details will be displayed in the original trailing stop order.

6.5 After a trailing stop order is triggered, the system will submit a market order only when the client has enough maximum buying power or positions in the account, and margin may be used. 

6.6 Orders cannot be executed in multiple directions at the same time. If the order quantity is greater than the current position, the order will not be executed. For example, a buy and a buyback cannot be executed simultaneously; the same applies to a sell and a short sale. 

6.7 A trailing stop order will only be triggered during the regular trading hours.

6.8 Advanced orders are simulated by Futu AU based on the basic orders and are irrelevant to those advanced orders provided by specific exchanges. Please refer to the corresponding order introduction page for more details. 

Disclaimer

Trailing stop order is an advanced order type provided by Futu AU for the client's convenience. While Futu AU endeavors to provide reliable trading services, there can be no guarantee to the absolute reliability of the order algorithm. Futu AU shall not be held liable for any loss or damage arising from any failure to execute an order due to network interruption, server abnormality, and other factors beyond its control.