Can a Trailing Stop Limit order extend the upside?

Question

I'm looking to place a trailing stop on a stock IF AND ONLY IF the stock reaches a certain profit level. My goal is to effectively place a sell limit order, but to extend the upside if the stock continues to run. (Note: I did not include any down-side protection in this example)
Will this work as described below? (Platform: Think or Swim)

Current stock price: 100
Side: Sell
Price rules: TRAILSTOPLIMIT
Limit Price: 150
Stop offset: -10

Desired outcome:
Will this place a trailing stop order of -10 if the stock prices goes up to 150?

nanoman · Accepted Answer

No, the stop order will go into effect immediately. If the stock drops $10, the stop will be triggered, even if the stock did not reach $150 first. Since you don't want a stop to occur in that case, you may need a conditional order instead.
The role of the "limit price" in the "trailing stop limit" order appears to be that when the stop is triggered (upon a $10 drop), it becomes a limit order instead of a market order. So the sell order would have a limit price of $150.
The problem is that the order will execute if the stock drops $10 and then reaches at least $150, whereas you want it to execute if the stock reaches at least $150 and then drops $10.

Can a Trailing Stop Limit order extend the upside?

One Answer

Add your own answers!

Ask a Question