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Trailing Take-Profit & Stop-Loss Explanation

1. What is Trailing TP/SL?

Trailing TP/SL allows users to preset orders within a percentage-based price range during market fluctuations. When the market moves in a favorable direction and then reverses, it helps traders limit losses and protect profits.

As the price moves favorably, the trailing TP/SL adjusts upward or downward by the set percentage. As long as the market continues favorably, the position remains open to capture further profit. ⚠️ Note: Trailing TP/SL does not move in the opposite direction.

2. How is Trailing TP/SL Executed?

  • Applicable only for closing existing positions.
  • Long positions: Activation price must be above market. When triggered, the stop price moves upward with market increases. If the price falls back ≥ callback rate, position is closed at market.
  • Short positions: Activation price must be below market. When triggered, the stop price moves downward with market decreases. If the price rebounds ≥ callback rate, position is closed at market.
  • Execution requires both activation price trigger and callback rate reached.

3. How to Set Trailing TP/SL?

  1. Trigger Conditions
    • Long: Market hits activation price + retraces ≥ callback rate.
    • Short: Market hits activation price + rebounds ≥ callback rate.
  2. Callback Rate
    • Range: 0.1% ~ 99%.
    • Can be manually set or quick-select (e.g., 5%, 10%).
  3. Activation Price
    • Can be manually set or use “latest market price”.
    • For longs, must be higher than market price; for shorts, must be lower.
  4. Trigger
    • Order activates once market price reaches activation level.
  5. Execution
    • Long: After rising, if price falls ≥ callback rate → closes at market.
    • Short: After falling, if price rebounds ≥ callback rate → closes at market.

4. Key Reminders

  • Too small callback → premature trigger from normal fluctuations.
  • Too large callback → may only trigger in extreme moves, risking loss.
  • Activation too close/far reduces efficiency.
  • Adjust based on market conditions + personal risk tolerance.

5. Why Use Trailing TP/SL?

  • Purpose: Capture profits without predicting exact highs/lows.
  • Limitation: Users can’t monitor market 24/7.
  • Advantage: Avoids frequent manual adjustments; system tracks automatically.

6. Example (Simplified)

  • Long 1 BTC, entry price 30,000.
  • Activation 32,000, callback 5%.
  • Market rises to 35,000 then drops to 33,250 (=35,000*(1-5%)).
  • System executes sell at 33,250.
    👉 Result: Closed below peak, but above entry, securing profit.