A trailing stop limit order is designed to allow an investor to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. A SELL trailing stop limit moves with the market price, and continually recalculates the stop trigger price at a fixed or dynamic amount below the market price, based on the user-defined "trailing amount" or "trailing ratio". The limit order price is also continually recalculated based on the limit offset. As the market price rises, both the stop price and the limit price rise by the trail amount and limit offset respectively, but if the stock price falls, the stop price remains unchanged, and when the stop price is hit a limit order is submitted at the last calculated limit price. A "Buy" trailing stop limit order is the mirror image of a sell trailing stop limit order, and is generally used in falling markets.
Let's assume that you purchase 100 shares of XYZ Company at 100 each. You put in a trailing stop limit. The investor sets a stop loss for 1 below the maximum price and a limit offset of 0.50 below the stop loss.
If the security is purchased at 100 per share, let's assume it rises to 1 per share before dropping to 99 per share. This triggers the stop loss. Your broker now generates a limit order to sell the security. But unlike at trailing stop loss, there must be a buyer for the stock willing to purchase it at or above 98.50 (the 0.50 limit).
Moomoo Financial Inc. simulates advanced order types on its books and routes the order to its clearing broker when it reaches the trigger price. Moomoo Financial Inc. simulates Trailing stop orders with the following default triggers:
● Sell Simulated Trailing stop orders become limit orders when the last traded price is less than or equal to the stop trigger price (Calculated as the highest Market Price after placing the order - Trailing Amount). the order price should be trigger price add limit offset.
o If you set Trailing Ratio instead of Trailing Amount, you can calculate Trailing Amount = the highest Market Price after placing the order * Trailing Ratio
● Buy Simulated Trailing stop orders become limit orders when the last traded price is greater than or equal to the stop trigger price (Calculated as the lowest Market Price after placing the order + Trailing Amount). the order price should be trigger price minus limit offset.
o If you set Trailing Ratio instead of Trailing Amount, you can calculate Trailing Amount = the lowest Market Price after placing the order * Trailing Ratio
Unless you select specific trading hours, advanced orders will only be triggered during regular trading hours or continuous trading session.
You can only place a trailing stop limit order to close position, selling short or buying to open new positions is not allowed.