Trailing Stop buy is just a reverse of Trailing Stop Sell. Before proceeding further please go through the article How Trailing Stop Sell works
A Trailing Stop Buy order sets the initial stop price at a fixed percentage above the market price as defined by the Trailing Amount. As the market price trough, the sell stop price dips one-to-one with the market but always at the interval set initially by the trailing percentage amount. If the stock price rise, the stop price remains the same. When the stop price is hit, a market order is submitted. Reverse this for a Trailing Stop Sell order. This strategy may allow an investor to limit the maximum possible loss without limiting possible gain.
Step to place Trailing Stop Buy order:
Select Trailing Stop Buy order type.
Select Base and Quote coin.
Select the number of coins needs to be bought.
E.g. 10 coins. (quantity could be in the fraction)
Enter the quote coin price at with you bought. If it is left blank, current market ask price will be used.
The offset is fixed percentage value above the current market (ask) price. Using this a stop loss always reaming with an offset of x% above from the trough market. If the market will come down, stop loss value will also come down. If the market goes up the stop loss will not change.
E.g. Offset = 3%
While placing order Quote price of LTC was 0.01623.
Assume market dips to value 0.01421 and then start rising. Since 0.01421 is the lowest price, so Stop value will be as 0.01421 * 1.03 = 0.01464.
Now, whenever market hit price above 0.0146363, a market buy order will be placed.
Note: At the beginning, the minimum value is equal to ask price at the time of placing an order.
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A hypothetical example:
Assume a Trailing Stop buy order is placed for 1 LTC coin with offset 5% where beginning trough price is at $100.
No. | LTC price per 1 unit | Trailing Stop value |
1. | $100 | $105 |
2. | $103 (rise) | $105 |
3. | $104 (rise) | $105 |
4. | $101 (correction) | $105 |
5. | $98 (correction) | $102.9 |
6. | $92 (correction) | $96.6 |
7. | $95 (rise) | $96.6 |
8. | $97(Execute Buy Order) | $96.6 |
Trailing Stop Buy needs a better example explained and also an example and not reuse the trailing stop sell example.
Will soon fix it.
This example is just fine, as of now
Thanks
It is better to show simple graphics/picture of what happens for every type of trade. Visual is sometimes better understanding.
Good suggestion. We would try to include as many graphics as we can in article revisions.