Announcing trailing stop orders on Kraken Pro

These new conditional order types secure maximum upside without having to manually readjust orders. Trailing stop orders let you stay dynamic, locking in profits when the price reverses against your favored direction. Trailing stop limit orders give even more precision by placing limit orders once certain retracement levels are hit.

Take 2 mins to check out this practical video explainer demonstrating trailing stop orders by @KevinSvenson_

Learn more about newest order type on Kraken Pro 👇https://t.co/RxYaey1Z7S pic.twitter.com/mXlzninVcD

— Kraken Pro (@krakenpro) December 22, 2023

What are trailing stop orders?

Trailing stop orders are a type of conditional stop order that automatically adjusts based on price changes. They keep a trade open as long as it’s profitable and close it once a certain retracement (percentage or price) occurs.

Trailing Stop Limit Orders work similarly but trigger a limit order at a defined offset (either percentage or nominal value) from the reference price. This ensures your order is executed within a specified price range rather than at market price, offering greater control.

Both order types on Kraken Pro can be triggered by the last, index or mark price of a spot or futures market.

Lower the risk of being stopped out by transient market spikes 💪 @CarpeNoctom shares a crucial tip on leveraging the ‘index price’ – powered by @CFBenchmarks, which aggregates real-time trade data from multiple exchanges.

Check it out ⬇️ pic.twitter.com/uemzpYgYeg

— Kraken Pro (@krakenpro) March 26, 2024

How do trailing stop orders work on Kraken Pro?

To use these orders, you must set the following parameters:

• Trailing Offset: The distance from the reference price (index, last or mark) at which a dynamic market order (for trailing stop) or limit order (for trailing stop limit) will be triggered. Entered as a percentage or currency amount (e.g., USD).
• Limit Offset (for Trailing Stop Limit Orders): Defines where the limit order will be placed relative to the trailing price. This can be positive or negative, giving you flexibility to control the execution price more precisely.
• Order Quantity: The total amount you want to buy or sell.

Example and use case for swing traders

Imagine you’re a swing trader who has an active long position in BTC. The current BTC price is $28,000, and you anticipate that the price will rise in the short term.

You enter your trade at $28,000 and place a trailing stop sell order with a trailing offset of $100. If the BTC price rises to $30,000 (without ever retracing by > $100) during the upside rally, your stop order will trail price action by your offset, in this example with a sell order dynamically placed at $29,900.

If the price then dips from $30,000 to $29,900, the trailing stop order will execute with a market sell executed at $29,900, thus locking in a +$1,900 price swing on your initial $28,000 entry price.

In this example, using trailing stop orders allows swing traders to capitalize
on short term price movements in a moving market.

Potential advantages for swing traders

For swing traders, trailing orders on Kraken Pro offer a wealth of strategic benefits:

• Profit protection: By constantly readjusting to the current market, index or last traded price, trailing stop orders lock in earned upside as long as the price continues to move in your favor without retracing by your trailing offset amount.
• Risk management: A trailing stop order executes if a price changes direction by a specified percentage or nominal amount, limiting potential losses.
• Emotional control: Remove emotion from a trade. Set your strategic parameters when you open a trade and let your trailing stop automatically execute them.
• Market adaptability: Trailing stop orders provide dynamic response to changing market conditions, giving you increased control over your order execution.