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What is a Trailing Stop?

A trailing stop is a stop price set at a defined percentage below the current price of a position. As the market price rises, the stop price also rises. If the market price falls, the stop price does not change.

Example:
  • Let’s say you buy a cryptocurrency for $10. If you use a 20% trailing stop, you would sell that cryptocurrency if it ever closed below $8. That’s 20% below $10.
  • However, if the cryptocurrency went up from $10 to $20, you would move your trailing stop up to $16. That’s 20% below the new closing price of $20. If the cryptocurrency closes below $16, you sell and make a profit. 
  • By using a trailing stop, you will not pull your profits out too early or hold onto a losing cryptocurrency for too long.

Does a one-size-fits-all trailing stop work for all cryptocurrenciesNot all cryptocurrencies are equal. We developed the Volatility Quotient to solve this problem. We’ll go into detail about the Volatility Quotient here.

Note that with trailing stops, we let you choose latest close or latest price.

trailing stop choice

Latest price is based on 30-minute intraday pricing. Latest close represents the investment’s price from midnight UTC (7pm EST / 8pm EDT).