A trailing stop-loss order allows traders to put a pre-set order at a selected percentage faraway from the market value when the market swings. It helps traders to limit the loss and to guard gains when a trade doesn’t move within the direction that traders consider unfavourable.
The trailing stop moves by a specified percentage (Callback rate) when the worth moves favourably. It locks in profit by enabling a trade to stay open and still profit as long because the price is occupation the direction favourable to traders. The trailing stop doesn’t withdraw within the other direction. When the worth moves within the other way by a specified percentage (Callback rate), the trailing stop will close/exit the trade at market value.
Binance Trailing Stop loss: the way to use?
Actually the trailing stop-loss order is enabled only within the Futures section of Binance.
Moreover, you’ve got to use the remake of the web site. In fact, a Trailing stop-loss order is supported on the newest version of the trading interface only.
If you’re within the Old version, you would like to click on the button “New Website” as within the figure below.
How to enable Trailing stop-loss order?
When you are within the New Website, you would like to travel move the cursor on Triangulum near “Stop Limit” and choose “Trailing Stop”
Now you’ll see as within the below screenshot.
How does a Trailing stop-loss order work on Binance?
Traders can place a trailing stop-loss order when getting into an edge initially, though not common. The trailing stop might be placed as a reduce-only order with the aim to decrease or to shut an open position, too.
For an extended trade, a sell trailing stop-loss order would be placed above the trade entry. The trailing stop price moves up by a trailing percentage (Callback rate).
A new trailing stop price is going to be formed when the worth moves up.
When the worth moves down, the trailing stop stops moving.
A sell order is going to be issued if the worth moves quite the predetermined callback rate from its peak price and reaches the trailing stop price. The trade is going to be closed with the sell order at market value.
A ”buy” trailing stop-loss order is that the reflection of a “sell” trailing stop order”.
For a brief trade, a buy trailing stop-loss order would be placed below the trade entry. The trailing stop price moves down by a trailing percentage (Callback rate).
A new trailing stop price is going to be formed when the worth moves down.
When the worth moves up, the trailing stop stops moving.
A buy order is going to be issued if the worth moves quite a predetermined callback rate from its lowest price and reaches the trailing stop price. The trade is going to be closed with the buy order at market value.
- Callback Rate
Callback rate determines the quantity a trailing stop price will trail the worth. The callback rate range is out there from 0.1% to five by placing the speed manually within the “Callback Rate” field. Alternatively, quick options like “1%” and “2%” are available for quick selection.
- Activation Price
Traders can fill within the price index that triggers the trailing stop. If no activation price is being filled, the activation price is going to be the market value by default (either “Last Price” or “Mark Price” subject to the selection of trigger types).
In order to put a buy trailing stop-loss order (SHORT POSITION), the activation price must be but the present market value .
The market’s lowest price must reach the activation price so as to satisfy the condition. If the worth doesn’t go below the Activation Price, the Trailing stop-loss order won’t start working.
Conversely (LONG POSITION), the activation price must be larger than the present market value to put a sell trailing order.
The market’s highest price must exceed the activation price so as to satisfy the condition. If the worth doesn’t go above the Activation Price, the Trailing stop-loss order won’t start working.
Activation price is employed so as to start out a Trailing stop loss/take profit only after a condition of price. So, if you place an activation price, probably you’ll get to place also a Stop loss order so as to guard your trade the case that the trailing stop loss doesn’t meet your Activation price condition!
- Reduce only-trigger (set in “Advanced” button)
It is typically obvious that the trailing stop loss is employed for reducing or closing your position and not for opening an edge. So you would like to activate the flag “reduce only-trigger” within the Advanced section.
I think it might be useful as a default flag, but actually it isn’t!
Advanced: reduce-only trigger flag and sort of trigger (Last Price and Mark Price)
- sort of Trigger (set in “Advanced” button)
Traders could choose either “Last Price” (default) or “Mark Price” as a trigger. If traders select “Mark Price” as a trigger, when the Mark Price reaches or exceeds the activation price, the trailing stop is going to be activated albeit the Last Price doesn’t reach the activation price.
Please be noted that Binance uses Mark Price as a trigger for liquidation and to live unrealized profit and loss. The Mark Price is usually a couple of cents from the Last Price. However, the Last Price might deviate dramatically and significantly from the Mark Price during extreme price movements. Hence, please monitor the worth difference between Last Price and Mark Price. you’ll always cancel the order you’ve got placed and replace the order if you’d wish to change the Trigger from Mark Price to Last Price or the other way around.
Conditions for the activation
Please note that there are 2 conditions for the activation of the trailing stop-loss order, namely activation price and callback rate will get to be fulfilled so as to activate the trailing stop-loss order to be issued as an order to close/exit the trade.
A sell trailing stop-loss order (LONG TRADE) is going to be placed if the conditions are met as follows:
- Activation Price = Callback Rate
- Rebound Rate >= Callback Rate
A buy trailing stop-loss order (SHORT TRADE) is going to be placed if the conditions are met as follows:
- Activation Price >= Lowest Price and
- Rebound Rate >= Callback Rate
What is the difference between Trailing stop-loss order and Stop Loss Order?
Stop-loss order helps to scale back losses while trailing stop-loss order locks in profit and limit loss at an equivalent time.
Stop-loss order is fixed and has got to be manually reset while the trailing stop is more flexible and automatically tracks the worth direction.