A trailing stop limit order is set with either a trailing ratio or trailing amount below the current market price of a security. The order also sets a limit price. The stop loss level moves up as the price rises. A stop order protects profits, or limits losses of a position while still profiting when the price moves favorably. A trailing stop-limit order guarantees a specific execution price. However, there is no guarantee that the order will be filled.
The trailing amount or ratio should be greater than 0, and the specified limit offset needs to be no less than 0.
● Sell-side: A sell market order is submitted when the stop price is hit.
If the trailing amount is set,
Initial stop price = initial market price - trailing amount
Adjusted stop price = the best price of a stock before triggering a limit order - trailing amount
If the trailing ratio is set,
Initial stop price = initial market price * (1 - trailing ratio)
Adjusted stop price = the best price of a stock before triggering a limit order * (1 - trailing ratio)
Sell trailing stop-limit order price = initial/adjusted stop price - specified spread
● Buy-side: A buy market order is submitted when the stop price is hit.
If the trailing amount is set,
Initial stop price = initial market price + trailing amount
Adjusted stop price = the best price of a stock before triggering a limit order + trailing amount
If the trailing ratio is set,
Initial stop price = initial market price * (1 + trailing ratio)
Adjusted stop price = the best price of a stock before triggering a limit order * (1 + trailing ratio)
Buy trailing stop-limit order price = initial/adjusted stop price + specified spread
Sell-side: Stock XYZ has a current price of $20, you submit a sell-side trailing stop limit order with a $5 trailing amount and a $1 limit offset. 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 limit order set at $14 (15-1) 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 XYZ's market price falls to $25 or lower, a sell-side limit order set at $24 (25-1) will be submitted automatically to the clearing broker.
Buy-side: Stock XYZ has a current price of $10, you submit a buy trailing stop-limit order with a 50% trailing ratio and a $1 limit offset. 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-side limit order set at $16 (15+1) 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, a buy-side limit order set at $13 (12+1) will be submitted automatically to the clearing broker.
Notes:
● After the trailing stop-limit order is triggered, there is no guarantee that the order will be successfully placed. Reasons such as insufficient buying power and positions will cause a failure to place the order.
● After the trailing stop-limit is triggered, the system will place a limit order automatically as soon as the stop price is hit. However, there is no guarantee that the order will be filled. If the order is not filled during the Time-in-force, it will be cancelled automatically by the system.
● After the trailing stop-limit order is triggered, whether it is filled or not, the trigger conditions will not be effective again. Please place a new order if necessary.
● After the trailing stop-limit order is triggered, the system will place a limit order. For clients' convenience, the order details will be displayed in the original trailing stop-limit order.
● After the trailing stop-limit order is triggered, the system will submit the order only when the client has enough maximum buying power on the account, and financing may be applied.
● 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.
● The trailing stop-limit order will only be triggered during the preset trading period.