A trailing stop-limit order triggers a limit order to buy or sell a security once the market price reaches a specified dollar trailing amount that is below the peak price for sells or above the lowest price for buys.
The price at which this order type will execute is continuously reset to a higher value if you enter a trailing -stop-limit order to sell and the bid price rises. Similarly, the price at which this order type will execute is continuously reset to a lower value if you enter a trailing -stop- limit order to buy and the ask price lowers.
Example – trailing stop-limit order:
If you place a trailing stop-limit order to buy XYZ shares 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*5% trailing)]. If the price of XYZ shares 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 XYZ shares falls below $20 per share, the stop price will continuously adjust to be 5% greater than the current price. So, if the price of XYZ shares falls to $15 per share, the stop price will then be set to $15.75 [$15 (current price) + $15*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.
- The duration type of good till extended market (GTEM) cannot be used for trailing stop-limit orders. Learn more about order durations.
- There is no maximum allowable spread between the limit offset and the trailing stop price for the U.S. markets
- There is a maximum of 9% allowable spread between the limit offset and trailing stop price for CAD markets.