New Order Types: Trailing Stop and Trailing Stop Limit Orders

Traditional stop orders are static—the trigger remains fixed at a single price. If the price of a stock moves and you want to adjust your stop, you have to modify your existing order.

Trailing stop and trailing stop limit orders are dynamic. As the price of a stock moves, the trigger price automatically moves in the same direction by a defined dollar value or percentage. Trailing triggers only move in one direction (upward for a sell stop, downward for a buy stop), so they stop moving if price reverses.

Here’s an example of how this works using a price-based trailing stop sell order:

• A stock is at $100 and you set a trailing stop order with a $5 trail. At the current price, your stop will be triggered at $95.
• If the stock rises to $110, your trailing stop will rise to $105, keeping the same $5 distance.
• If the stock then falls to $107, your trailing stop will remain at $105. It only moves in one direction.

When to Use Trailing Stop Orders

Trailing stop orders convert to market orders when the trigger price is reached. They can be useful in trending markets, where you may want to raise a stop loss gradually as the price increases. Trailing stop buy orders can also be used to follow a stock’s price down and capture a favorable entry if it bounces or reverses.

However, keep in mind that trailing stop orders are prone to slippage. If a stock gaps through your trailing stop price, the market order will be executed at the current price regardless of its favorability.

When to Use Trailing Stop Limit Orders

Trailing stop limit orders convert to limit orders when the trigger price is reached. Whether your limit order will execute after your trailing trigger is triggered depends on the limit price you set.

For example, say you set a trailing stop limit sell order on a stock that’s currently at $105, with a trail of $5 and a limit of $102. For your sell order to execute, the stock must fall to $100, then rise to $102.

Trailing stop limit orders are best when your priority is to achieve a certain price for a buy or sell, rather than getting filled under any conditions once your stop trigger is hit. In volatile markets, they can help you avoid selling at a poor price if the price briefly dips below your trigger and then recovers to your limit. If the price keeps falling, your order will not fill and you could hold the position through further losses.

How to Use Trailing Stop and Trailing Stop Limit Orders

You can set trailing stop and trailing stop limit orders in the Clear Street web and mobile apps, using the trading API, using Omni AI, or through Clear Street’s MCP server. Trailing stop triggers can be based on price (i.e. a dollar value) or percentage from the current stock price.

In the app:

1. Select Trailing Stop or Trailing Stop Limit as the Order Type.
2. Choose Price or Percent as the Trailing Offset Type.
3. Set your Trailing Offset. The estimated stop price is displayed based on the current stock price.

In the API:

1. For order_type, enter TRAILING_STOP or TRAILING_STOP_LIMIT.
2. Add a parameter trailing_offset and enter the price or percent (in basis points) to offset your trailing stop trigger.
3. Add a parameter trailing_offset_type and enter PRICE or BPS.

[
  {
    "order_type": "TRAILING_STOP",
    "instrument_type": "COMMON_STOCK",
    "side": "BUY",
    "symbol": "TSLA",
    "quantity": "350",
    "time_in_force": "DAY",
    "trailing_offset": "5",
    "trailing_offset_type": "PRICE"
  }
]

Disclosures

Trailing stop orders don’t guarantee an execution price. Once triggered, a trailing stop becomes a market order and may fill well away from the stop price; a trailing stop limit order may not fill.

Securities shown are for illustrative purposes only and are not a recommendation.

Omni AI (Clear Street Technologies LLC) is informational only, not advice; every order requires your confirmation.