Trailing Stop is a stop strategy based on price movements. It helps you lock in profits as the price rises or falls, while chasing bigger gains. If the price direction changes (also called “retracement”, indicating the price drops when you have a long position, or rises when you have a short position), and retrace by a certain price distance or rate, the Trailing Stop will close your position.

The price distance or rate is set by you. Below we will go through two examples to illustrate how Trailing Stop works.

How It Works

Example 1: Setting Trailing Stop by Price Distance for Long Position

Assume a trader is holding a 1 BTC long position in BTCUSDT perpetual futures, with an average position price of 28,000 USDT. When the last price reaches 30,000 USDT, the trader sets a Trailing Stop with a retracement distance of 1,000 USDT.

This means your minimum stop price is:

Last price when setting Trailing Stop - Retracement distance = 30,000 - 1,000 = 29,000 USDT

If stoping at this price, your expected profit is:

(Stop price - Average position price) * Position size = (29,000 - 28,000) * 1 = 1,000 USDT

This is the profit locked in by the Trailing Stop. Afterwards, if the last price keeps rising from 30,000 USDT, the stop price will also keep increasing to chase bigger gains. Once the last price drops by at least 1,000 USDT, the Trailing Stop will close your position at market price to successfully take profit.

Let’s use the market movement in the figure below as an example. The blue solid line is the last price, and the orange dashed line is the Trailing Stop price:

1. Initially, as the last price rises from 30,000 USDT to 31,000 USDT, the Trailing Stop price also moves up consistently, maintaining a 1,000 USDT price distance from the last price.
2. When the last price starts to fall, the Trailing Stop price stops changing and stays fixed at 30,000 USDT. Once the last price retraces by 1,000 USDT, the position will be closed.
3. However, the last price only retraced 500 USDT at most before rebounding. During the rebound and before reaching the previous high of 31,000 USDT, the Trailing Stop price stays unchanged because it is based on the highest last price since setting the Trailing Stop.
4. Afterwards, as the last price keeps rising to 32,000 USDT, the Trailing Stop price moves up as well, helping the trader gain more profit.
5. When the last price finally drops from 32,000 USDT to 31,000 USDT, retracing 1,000 USDT, the Trailing Stop is triggered and closes the position at market price. The final profit is: (Stop price - Average position price) * Position size = (31,000 - 28,000) * 1 = 3,000 USDT.

The Trailing Stop helped the trader gain an additional 2,000 USDT in profit in the market movement described above, on top of locking in 1,000 USDT.

Example 2: Setting Trailing Stop by Rate for Short Position

Assume a trader is holding a 1 BTC short position in BTCUSDT perpetual futures, with an average position price of 34,500 USDT. When the last price reaches 30,000 USDT, the trader sets a Trailing Stop with a 10% retracement rate.

This means your maximum stop price is:

Last price when setting Trailing Stop * (1 + Retracement rate) = 30,000 * (1 + 10%) = 33,000 USDT

If stoping at this price, your expected profit is:

(Average position price - Stop price) * Position size = (34,500 - 33,000) * 1 = 1,500 USDT

This is the profit locked in by the Trailing Stop. Afterwards, if the last price keeps falling from 30,000 USDT, the stop price will also keep decreasing to chase bigger gains. Once the last price rises by at least 10%, the Trailing Stop will close your position at market price to successfully take profit.

Let’s use the market movement in the figure below as an example. The blue solid line is the last price, and the orange dashed line is the Trailing Stop price:

1. Initially, as the last price drops from 30,000 USDT to 27,000 USDT, the Trailing Stop price also moves down consistently, maintaining a 10% price distance rate from the last price.
2. When the last price starts to rise, the Trailing Stop price stops changing and stays fixed at 29,700 USDT. Once the last price retraces by 10%, the position will be closed.
3. However, the last price only retraced 5.6% ((28,500 - 27,000) / 27,000) at most before dropping again. During the drop and before reaching the previous low of 27,000 USDT, the Trailing Stop price stays unchanged because it is based on the lowest last price since setting the Trailing Stop.
4. Afterwards, as the last price keeps falling to 24,000 USDT, the Trailing Stop price moves down as well, helping the trader gain more profit.
5. When the last price finally rises from 24,000 USDT to 26,400 USDT, retracing 10%, the Trailing Stop is triggered and closes the position at market price. The final profit is: (Average position price - Stop price) * Position size = (34,500 - 26,400) * 1 = 8,100 USDT.

The Trailing Stop helped the trader gain an additional 6,600 USDT in profit in the market movement described above, on top of locking in 1,500 USDT.

Activation Price

You may want to set the Trailing Stop for your position only after the last price moves to a certain level in your expected direction. For example when going long, you want to set the Trailing Stop only after the last price rises to a certain point. Pionex provides the “Activation Price” feature to help you achieve this strategy.

You can set an activation price for the Trailing Stop, so that the Trailing Stop will only be set after the last price reaches the activation price.

Below we will show you how to use the activation price to set Trailing Stops on Pionex.

Note: For long positions, the activation price must be higher than the current last price. For short positions, the activation price must be lower than the current last price. If you do not set an activation price, the Trailing Stop will be set immediately.

How to Set It Up

Assume a trader is holding a long position in BTCPUSD perpetual futures. The current last price is 29,350 PUSD. The trader wants to set a Trailing Stop with a 500 PUSD retracement after the last price reaches 30,000 PUSD.

To do this, simply complete the following steps in the App:

1. Tap the Trailing Stop button on the position panel.
2. Select “By Distance” and set the retracement to 500 PUSD.
3. Set the activation price to 30,000 PUSD.
4. Tap Confirm.

Once set, the position will display the information of the trailing stop. The gray number on the left indicates the activation price, while the number on the right represents the retracement price distance:

When the latest price reaches 30,000 PUSD, the trailing stop is activated and the number on the left turns black, indicating the current stop price:

You can view all current Trailing Stop orders under the open orders list:

Currently on the web version you can only view, modify, or cancel existing Trailing Stops. The ability to add new Trailing Stops is under active development. You can set up new Trailing Stops for your positions on the App first.