Are you asking yourself what advanced trading is? To maximize profits and limit downside risk, seasoned traders use trailing stops. Wait, what?
A trailing stop loss. A rare and thus high-value animal across the crypto world. It follows or, in other words, “trails” the market price and fires when the trend changes.
The very old and yet familiar nature of the market sets the scene here. There are two basic trailing order types under the moon, trailing stop buy and trailing stop sell but they unlock numerous trading opportunities.

 

Trailing Stop Buy and Trailing Stop Sell

A trailing buy order is good to go long because it follows the asset’s price as it goes down. The order gets triggered as soon as the trend reverts, and the price rises from its low by the trailing distance you’ve set.
That allows you to not only buy at a lower price, but also to do that exactly when the price stops falling and starts rising, maximizing your chances to make a profit..
Trailing sell order trails the price of the asset as it goes up. It gets triggered as soon as the price of the asset falls from its peak by the trailing distance you’ve set.
That allows you to not only sell at a higher price, but also to do that exactly when the price stops rising and starts falling.
Look at the pictures down below, they will help you understand better.

 

Trailing Buy Order

 

Trailing buy order scheme

 

Say you want to enter a long position with a trailing stop buy. You expect the price to go back up after a sharp decline on upcoming news from Elon. He’s accepting Bitcoin again or buying a gazillion of Bitcoin, or paying Martians in Bitcoin. The problem is that you worry now that the price might drop further before rebounding.

What is the best way to establish your position under the circumstances? You set up a trailing stop buy at a certain trailing distance and, basically, wait. The order trigger will follow the market price. If it moves lower, the trigger will be moved lower, respectively, to keep the distance. If the price rises, the trigger will remain in place. The order will be executed when the price rises by the trailing distance after the latest low.

 

Trailing Sell Order

 

Trailing sell order scheme

Now that you have your Bitcoin you probably want to exit your position at some point. Why? Maybe, on the rumors that Tesla might sell a portion of its Bitcoin treasures. Or Elon abandones Bitcoin and switches to Doge. Or simply tweets something at some point. You expect some event in the near future will pull the market down, but believe it might still rise quite a bit before the pullback.
How do you ensure you maximize your profit but keep your downside protected?

You set up a trailing stop sell at a certain trailing distance and, basically, wait. The order trigger will follow the market price. If it rises higher, the trigger will be moved higher, respectively, to keep the distance. If the price falls, the trigger will remain in place. The order will be executed when the price falls by the trailing distance from the latest peak.

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If you want to learn more on how Trailing Stops work, check real-life setups and find out how advanced Trailing Stop features can make it an even more compelling trading tool, check our detailed guide on how to trade with Trailing Stop orders.

 

Trailing Stop Loss and Trailing Take Profit

You’ve most likely heard about trailing stops in the context of a trailing stop loss or a trailing take profit. Are they different things? Which one is better? Or are they one and the same?
There’s some confusion here caused by the semantics. Let us bring some clarity to this issue.

Trailing Stop order can be used to both enter and exit a position. When you enter a position with a Trailing Stop order, you’d refer to it as a Trailing Buy (if you establish a Long position) or a Trailing Sell (if you go Short). When you exit your position with a Trailing Stop, you’d refer to it as a Trailing Stop Loss or Trailing Take Profit. In fact, when Trailing Stop order is used to exit a position it possesses qualities of both Stop Loss and Take Profit at the same time. That’s what makes it so great. And that’s what causes the confusion. Let’s look at an example:

Trailing stop loss and take profit

Say you’ve bought Bitcoin and now want to exit the position with a profit, but also limit your losses in case the market price drops from here. Instead of a ‘traditional’ Stop-Loss + Take-Profit combo, all you have to do is to send a Trailing Sell order. If the price falls, the order will sell when the trailing distance is covered – acting as a Stop Loss. If the price starts moving up, the order trigger will follow, effectively moving your Stop Loss higher and decreasing your potential losses. That’s why this setup is often referred to as Trailing Stop Loss. If market price keeps rising, at some point the order trigger will move above the price at which you bought your Bitcoin in the first place. At this point your Trailing Stop Loss effectively becomes Trailing Take Profit. Now you’ve got yourself a sure profit. The only question remains – how large it will be. 

In a nutshell, a trailing stop loss can turn into a trailing take profit if the asset price goes up. That’s why these terms are used interchangeably.

 

Best apps for crypto Trailing Stop Loss trading

 

65436363311 - How to use trailing stop orders for efficient trading?

 

So, now you, hopefully, know what trailing stop orders are. The fact of the matter is that they are rare animals, and only four spot crypto exchanges (Bitfinex, Bitstamp, OKEx, Liquid) and three derivatives exchanges (Bitmex, Binance Futures, FTX), support trailing stop market orders natively as of writing this in 2021. Zero crypto exchanges support Trailing Stop Limit orders, allow for advanced features like Trailing Start, Improve-only mode, and Reverse Trailing or offer Trailing Stops as part of trading bots.

Some advanced trading terminals have all this and more, though. One of those terminals is Good Crypto, a multi-exchange trading and portfolio management tool, available on iOS, Android and Web. Good Crypto offers advanced trading functionality for 30+ largest crypto exchanges, fully-fledged portfolio manager,fuf and a suite of smart screeners and alerts.

Install the app on iOS or Android and see for yourself.