We are excited to announce the introduction of trailing stop orders, now available on all spot and futures markets on the Kraken Pro web interface.
This new type of conditional order seeks to guarantee maximum upside without having to manually and repeatedly readjust orders. Trailing stop orders allow you to stay dynamic and lock in your profits at a specific level once a price rise reverses in your preferred direction:
What are trailing stop orders?
Trailing stop orders are a type of conditional stop order that automatically adjusts as the market price of an asset changes. Traders use them when looking to protect current gains from a trade. They allow a trade to remain open as long as it continues to generate additional profits. It only closes the position once a certain amount of retracement loss (either percentage or nominal price) occurs.
Trailing stops on Kraken Pro can be triggered relative to the last price, index or mark price of the corresponding spot or futures market.
How do trailing stop orders work on Kraken Pro?
Using trailing stop orders on Kraken Pro involves setting two main parameters:
- Final offset: This is the offset from the reference price (index or last) at which a dynamic market order will be executed. This can be entered as a set percentage or as an offset in the nominal quote currency (e.g. USD).
- Ordered quantity : This is your total order amount, the amount you are actually trying to buy or sell.
Example and use case for swing traders
Imagine that you are a swing trader who has an active long position in BTC. The current price of BTC is $28,000 and you expect the price to increase in the short term.
You enter your trade at $28,000 and place a trailing stop sell order with a final compensation of $100. If the BTC price rises to $30,000 (without ever coming back $100 or more) during the rise, your stop order will continually follow the BTC price by $100 – in this example, up to $29,900, $100 below $30,000.
If the price then falls from $30,000 to $29,900, the trailing stop order will be executed with a market sell executed at $29,900, thereby locking in a price movement of +$1,900 from your price. Initial entry of $28,000.
In this example, the use of trailing stop orders allows swing traders to capitalize
on short-term price movements in a moving market.
Potential Benefits for Swing Traders
For swing traders, trailing orders on Kraken Pro offer a multitude of strategic advantages:
- Profit protection: By constantly readjusting to the current market, index, or last traded price, trailing stop orders lock in the upside gained as long as the price continues to move in your favor without retracing your final compensation amount.
- Risk management: A trailing stop order executes if a price changes direction by a specified percentage or nominal amount, thereby limiting potential losses.
- Emotional control: Remove emotion from an exchange. Set your strategic parameters when you open a trade and let your trailing stop execute them automatically.
- Market adaptability: Trailing stop orders provide a dynamic response to changing market conditions, giving you greater control over your order execution.
These materials are intended for general information purposes only and do not constitute investment advice or a recommendation or solicitation to buy, sell, stake or hold any crypto-asset or to engage in any trading strategy. specific trading. Kraken does not and will not endeavor to increase or decrease the price of any particular cryptoasset it makes available. Some crypto products and markets are unregulated and you may not be protected by government compensation and/or regulatory protection programs. The unpredictable nature of crypto-asset markets can result in losses of funds. Tax may be payable on any returns and/or increases in the value of your cryptoassets and you should seek independent advice on your tax situation. Geographic restrictions may apply.