The Most Effective and Powerful Ways to Trade Using Different Trailing Stop Strategies

In all kinds of long-term investing and short-term crypto trading, deciding the right time to exit a position is as important as finding out the best time to enter any position. When everything is gone well, and it’s time to exit the position, you will earn profits. But perhaps you are tempted to ride the tide for longer periods, there are chances of losses.

The best crypto trading exchange like Binance allows its traders to play and win the game smartly. The platform offers the best strategies and techniques to its traders that will help them identify the optimal moment of exit. This further ensures acceptable profits while guarding against the offensive losses. Trading effectively on a crypto trading platform is vital to any successful crypto investment strategy.

Using stops and trailing stops while trading cryptocurrency is the best way to preserve your capital or to lock in profits. With that, you need a powerful strategy and tricks to make it work for you. Luckily, TrailingCrypto has the right tools which you need to become successful.

Here are the most popular and powerful ways to earn profits with your crypto trades:

Trailing Buy orders

Before understanding Trailing buy orders, first you must know about trailing stop. Usually Trailing Stop orders are also known as Trailing Take Profit orders which help with risk management by locking in profits and limiting losses. In this order type, traders are required to set a trail percentage which lags behind the price, and ratchets up with the crypto asset price at the same time. Whenever price of crypto asset increases, the trail also increases, but if price falls, the trail percentage will remain the same. When the price meets the trail, a sell order will be executed.

Trailing buy orders functions as same as trailing stops but in reverse. As the price decreases, the trail also decreases, and when the price increases, the trail will remain as same. These orders can be incredibly useful for the traders trying to buy cryptocurrencies at low price or at discount. Let’s understand it with an example:

Imagine a trader wants to invest $100 in BTC every month. However, he wants to get the best price, but can’t analyze charts constantly for a good support level. Setting a trailing buy order will allow him to lock in discounted buys and accumulate more BTC. Just like Trailing stops, traders can also combine Trailing buy orders with stop buy. Let’s understand about Trailing stop buy order and how is it beneficial.

Trailing stop buy

With a trailing stop buy order, the stop price follows or trails the lowest price of the crypto asset by a trail that you set. If the asset price increases above its lowest price by a trail or more, it will trigger a buy market order. Here, your crypto asset will be purchased at the best price.

A Trailing stop buy order sets the initial stop price at a fixed percentage above the market price as defined by the set trailing amount or percentage. As the market price decreases, 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 rises, the stop price remains the same. When the stop price is hit, a market/ buy order is submitted.

Let’s understand it with an example:

Imagine, if a trader wants to buy ETH, but thinks it will fall in value and want to wait to buy it. You also think that if ETH goes up by a defined amount (let’s say 5%) it may go even higher.

To minimize potential costs, the trader set your trail to 5% in an attempt. The stop price will always remain 5% above ETH’s lowest price.

· ETH is currently trading at $110 per share. Here, your stop price will start at $115.50, which is 5% higher than the current price of ETH.

· If ETH stays between $110 and $115.50, the stop price will stay at $115.50.

· If ETH falls to $100, the stop price will update to $105, 5% above than the new lowest price.

· If ETH rises to the stop price ($105) or higher, it triggers a buy market order. And, the ETH will be purchased at the best price currently available in the market.

Assume that a trailing stop buy order is executed for 1 ETH coin with a Trail percentage 5% where beginning trough price is $100.

TrailingCrypto allows its traders to place Trailing stop buy order using the below steps:

• Select Trailing Stop Buy order type.
• Select Base and Quote coin. E.g. Market: BTC/LTC
• Select the number of coins needs to be bought. You can also select percentage option to specify relative coin total (base coin). E.g. 10 coins (quantity could be in the fraction). Or select 10% of BTC.
• Enter the quote coin price at with you bought. If it is left blank, current market ask price will be used. E.g. 0.01516 BTC
• The offset is fixed percentage value above the current market price. Using this, 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.

Trailing stop limit order

Another popular trading strategy followed by expert traders to limit their losses is setting the trailing stop limit order. This order triggers a limit order to buy or sell a security once the market price reaches the specified trail amount which is below the peak price for sell, and above the lowest price for buy.

The price at which trailing stop limit order is executed continuously reset to a higher value if you enter the trailing limit sell order and the bid price rises. Similarly, if you enter a Trailing stop limit order to buy, the price at which this order is executed will be continuously reset to a lower value.

Example:

· If you place a trailing stop-limit order to buy ETH currently trading at $20 per share with a 5% trailing value and a $0.10 limit offset, this will set the stop price at $21 [$20 (current price) + ($20 x 5% trailing)].

· And, if the price of ETH increases to $21 per share, a limit order to buy the shares at $21.10 [$21 (stop price) + $0.10 offset] will be sent.

· If the price of ETH falls below $20 per share, the stop price will continuously adjust to be 5% greater than the current price.

· So, if the price of ETH falls to $15 per share, the stop price will then be set to $15.75 [$15 (current price) + $15 x 5% (trailing)].

When you select a trailing stop-limit order, the limit price field is replaced by the trailing field, and the stop price field is replaced by the limit offset field.

Let’s understand further about Trailing limit sell and Trailing limit buy order with example:

Trailing Stop limit buy

Let’s say the current market price for ETH is $100, trigger price is Rs. 110, and the target buy is $114 for an ordinary stop limit buy order. Here we will add a trail interval of $0.10. Once you set the trail and confirm the order, either of two things will happen:

· When the price moves up, it moves closer to the trigger price. If the market doesn’t move down at all and hits the trigger price, your order would be executed somewhere between $110 and $114 at the best offered price.

· And, when the price goes down, your trail would make sure that it is updating trigger price and target price. More the market falls, lower is your target price and trigger price. Let’s say the current market price is $100 and it falls to $99.90. Here the buying price will change to $109.90 and maximum price you are willing to pay as $113.90. And, when the market price moves down, stops, reverses, and reaches the triggers, your order will be executed between $109.90 — $113.90

Trailing limit sell

Let’s say, for an ordinary stop-limit sell order, the current market price is $100, trigger price $108, and the target sell is $106. And here, for the trailing limit sell order, you will be setting a trail interval at $0.10. Once you set the trail, and confirm the order, your order will be executed in two ways:

· When the price moves down, it will move closer to the trigger price. If the market doesn’t move up and hits the trigger price, your order will be executed somewhere between $108 and $106 at the best offered price.

· And if the price moves up, your trail would make sure it is updating the set target price and trigger price. The more the market moves up, the higher will be your trigger price and target price. This makes sure selling the asset at the best higher price as possible.

Here your current market price will change to $110.10. Higher selling price will change to $108.10 and minimum price you are willing to sell changes to $106.10. Here, if the market moves up, stops, reverses, or reaches the target price, your trailing limit sell order will be executed somewhere between $108.10-$106.10

Conclusion

TrailingCrypto gives you the best tools you need to earn good profits. Trailing stop orders, trailing stop buy, trailing limit buy and sell, and the ability to execute many strategies across trading pairs in parallel. No matter what is your trading method, strategy, or style, you can make it possible with TrailingCrypto.