Trailing Stop

Trailing Stop Strategies

Trailing stops lock in profits while allowing trades to run.

Trailing Methods

1. ATR Trail (Recommended)

Trailing Stop = Highest High - (ATR x 2). Adjusts to volatility -- tighter in calm markets, wider in volatile markets.

2. Structure Trail

Move stop below each new swing low (long) or above each new swing high (short). Lets the trade breathe while locking in structure.

3. Moving Average Trail

Use MA as trailing stop (common: 10 EMA, 20 EMA). Exit when price closes below MA.

4. Chandelier Exit

Trail from highest high by ATR multiple. Classic exit strategy, good for trending markets.

5. Fixed Distance Trail

Move stop by fixed amount (pips/%). Simple but can be too static -- prefer ATR or structure.

When to Start Trailing

| Trigger | Strategy | | ------------------- | ------------ | | After 1R profit | Conservative | | After 2R profit | Moderate | | New structure break | Dynamic | | Immediately | Aggressive |

Hybrid Approach

Combine methods for staged exit management:

1. Fixed initial stop
2. Move to breakeven at 1R
3. Trail by structure after 2R
4. Tight ATR trail near target

Exit Scenarios

| Price Action | Trailing Action | | --------------- | ----------------- | | New high/low | Move stop up/down | | Consolidation | Keep stop same | | Reversal candle | Tighten trail | | Structure break | Consider exiting |

Workflow

Example -- Long trade at $100, stop at $95:

1. Price hits $108 (1.5R) -> Move stop to $100 (breakeven)
2. Price hits $115 (3R) -> Trail to $110 (below last swing)
3. Price hits $120 -> Trail to $115
4. Price pulls back -> Stop hit at $115 (3R locked)

Key Rules

• NEVER trail too tightly -- noise will stop you out prematurely
• NEVER trail against trend structure -- only move stops in the profit direction
• NEVER override your trailing rules during a trade -- define them before entry
• NEVER manually exit before your trailing stop is hit unless structure clearly breaks
• Pre-define trailing rules before entering the trade
• Allow some drawdown from highs -- that is the cost of catching extended moves

Related Skills

• stop-loss-strategies -- initial stop placement determines when trailing begins
• partial-profit-taking -- combine trailing stops with partial exits for optimal capture

Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

• Author: SKE-Labs
• Source: SKE-Labs/agent-trading-skills
• License: Apache-2.0

Install and usage instructions live in the source repository linked above.