A trailing order is a Stop order the rate of which can automatically change at
market movements (i.e. the order which tracks the market). The order rate
changes so that the distance between it and the current rate would not exceed
a specified value called a trailing distance. It means the order rate
changes only if the market price moves away from the order rate. It is constant
if the market moves towards the order.
There are two parameters for trailing management: a trailing distance
and a trailing step.
The trailing distance sets a distance the order rate follows the market at.
The trailing step sets a minimum excess of a distance between the current
rate and order rate to that of the trailing necessary for the trailing realization.
As long as the difference between the market-to-order distance and that of the
trailing makes less than one step, there is no rate shift. So, trailing works
not for every quote, but only when the distance between the market and order
exceeds the trailing distance one step or more.
The trailing step determines how often the trailing will be performed, i.e. the
trailing frequency. The larger the step, the less frequently the trailing takes
place. For example, trailing with a step of 10 will be triggered every time the
current rate-to-order distance is 10 points above that of the specified
trailing. That is, the current rate should pass at least 10 points from the
previous trailing point (the order rate change). It is the final change of the
current rate from the previous trailing in the direction you need that is
considered only, no rate fluctuations matter.
If the market moves towards the order (the distance between the market and the order decreases), the order rate remains unchanged.
When the market moves off the order, if the distance between the market and order exceeds the trailing distance one trailing step or more, the order rate will change so that to get this distance equal to that of the trailing. The market moving on off the order, the next change in the order rate will take place when the rate covers the trailing step distance from the previous trailing point.
Thus, trailing maintains the distance between the order rate and the current rate at a trailing distance. This distance can also reach a trailing distance plus trailing step value.
The example below shows how trailing works.
Say, there is an open position of Buy 10,000 at the
rate Rb = 1.2500.
A Sell 10,000 Stop order with the rate Ro =
1.2450 is placed to limit a possible loss. It means the maximum loss
is limited to 50 points. The order has a trailing with a distance of
50 and step of 10 enabled.
If the current rate Rc goes down and reaches the value of 1.2450, the order will be executed, that is a Sell deal will be executed at this rate. The position will close with a 50 points' loss. When the current rate moves towards the order, the trailing does not matter.
If the current rate starts moving off the order, the rate of the Stop order with
an activated trailing may change.
For instance, the current rate went up and reached the level of 1.2510,
i.e. the distance between the current rate and the order rate (60 points)
became greater than or equal to the trailing distance + step
(50 + 10 = 60 points).
In this case, the order rate will change so that to maintain the 50
points' distance from the current rate Rc:
Ro = 1.2510 - 50p. = 1.2460
If the market keeps moving off the order, the next change in the order rate will occur after the current rate passes 10 points from the last trailing point (1.2510) and reaches the value 1.2510 + 10p. = 1.2520.
This will take place every time the market moves another 10 points away from the order.
Assume that Rc went on rising and reached the level of
1.2560. The trailing will change the order rate Ro
to keep the 50 points' distance:
Rc = 1.2520 -> Ro = 1.2520 - 50 = 1.2470
Rc = 1.2525 -> Ro = 1.2470 (it is unchanged, as Rc moved for 5 points, i.e. less than one trailing step)
Rc = 1.2530 -> Ro = 1.2530 - 50 = 1.2480
Rc = 1.2540 -> Ro = 1.2540 - 50 = 1.2490
Rc = 1.2550 -> Ro = 1.2550 - 50 = 1.2500
Rc = 1.2560 -> Ro = 1.2560 - 50 = 1.2510
In this instance, the order is already in the "breakeven zone" regarding the open position. That is, if the rate Rc makes a move towards the order and reaches 1.2510, the order will be executed. Together with it the Sell 10,000 trade is effected, closing thus the position at a 10 points' profit.
If Rc keeps on moving up and reaches the level of 1.2623,
the trailing will change the rate order to as much as 1.2570 by the moment.
If the current rate turns now and drops to 1.2570, the position will close
at a 70 points' profit at the order execution.
As long as the distance between the current rate and the order rate is within
the trailing distance + trailing step, the trailing order rate
remains unchanged.
Trailing in the TradeRoom is activated, or deactivated, in the Order editing form with the help of the Trailing option. When the option is on, you can also set a distance and a step here. You can do this at any time, for any Stop order. Trailing cannot be activated for a Limit order, as it will never be executed.
Trailing for Stop orders placed on the
Forex Trading page can be activated at an order placement, with the option
in column "Trailing". In this case, the standard values are set: the trailing
distance equals to the distance between the order rate and current rate at the
order placement whereas the trailing step is set equal to a minimum step. You
can always modify the parameters at an order editing.
The default state of the Trailing option column is set in the
Trading Preferences with the help
of the "Activate trailing for Stop orders" option.
In this case the order rate remains unchanged until the trailing condition is
fulfilled, i.e. until the distance between the order rate and the current rate
does not exceed the value of the trailing distance + trailing step.
After that, the trailing takes place as usually.
The trailing will be performed at a quote receipt, in case its condition is
fulfilled. That is, if the distance between the order rate and the current rate
will be more than the value of the trailing distance + trailing step.
Particularly, the condition may be fulfilled immediately at the first quote
after you have saved your order.
Upon the order saving, the trailing will be performed with new parameters as it
is described above:
If the distance between the order rate and that of the market is less than the trailing distance.
If the distance between the order rate and that of the market is more than the trailing distance.
Trailing is carried out on the server so it does not depend on the TradeRoom
running in your computer. You can start, or exit, the TradeRoom as the case may
require. Just be careful when you edit the trailing order since its rate can
change on the server even while editing. Therefore, to preserve the trailing
results, the order rate is updated only if you modify it on edit. Only in this
case the order rate will be replaced on the server with a new one. In the event
the editing form rate is unchanged, the server saves the last order rate value
trailed.