Hi there,
I wanted to know how a trailing stop behaves if, because of market circumstances, a limit order is invoked?
If the trailing stop loss is already on the market, will it be replaced by the limit order?
(shouldn’t you first cancel the stop loss in the code by setting it to 0 in order for the limit order to settle in/take over?)
Or does the trailing stop loss stay in the market, whatever happens afterwards in the code, once it’s been triggered?
cheers,
Good questions!
Trailing Stop (TS) can stop a profitable trade from turning into a losing trade when price retreats.
The TS would still be following price even if there is a price spike, but the spike may hit a Limit Order and so secure a higher profit (than if TS it hit by price retreating after the spike).
Here’s some bedtime reading … 🙂
https://www.investopedia.com/articles/trading/08/trailing-stop-loss.asp#:~:text=Here’s%20how%20it%20works.,the%20price%20reaches%20new%20highs.
Do you mean the built-in instruction SET STOP PTRAILING or a code snippet?
@RobertoGozzi: I meant a personal version of a trailing stop loss…
My main preoccupation is that I don’t want a limit order to take over if my TSL is already in the market.
I’m not sure whether a trailing stop loss, when it has been activated, can be removed because of an instruction in the code – other than the question below?
That’s why I asked if there should/ has to be a specific mention of the TSL set to 0 in order for a limit order to take over/settle in?
If it’s an opposite order, the older one will be closed before opening the new one. In such a case if a trailing stop had already been activated, you will exit at an even better price! (then you’ll have to restart the trailing stop to trail the new trade).
If you are adding an additional position (accumulation), then I sugget that you first clear the trailing stop, if already activated, to restart trailing from the new POSITIONPRICE (not TradePrice), to be able to exit at breakeven or at some gain.
