How does a trailing stop differ from a trailing stop limit in the context of cryptocurrency?

3 answers

• Nov 29, 2021 · 3 years ago
  A trailing stop is a type of order that allows you to set a stop price that follows the market price at a certain distance. This means that if the market price moves in your favor, the stop price will also move up or down accordingly. The main advantage of a trailing stop is that it allows you to lock in profits as the market price increases, while still giving you the flexibility to let your profits run. However, one disadvantage is that if the market price suddenly reverses, the trailing stop may not be able to protect your profits effectively. In contrast, a trailing stop limit is a combination of a trailing stop and a limit order. With a trailing stop limit, you can set a stop price that follows the market price, but you also set a limit price that acts as a trigger for the limit order. This means that once the stop price is reached, a limit order is placed at the limit price. The advantage of a trailing stop limit is that it allows you to have more control over the execution price of your order. However, one disadvantage is that if the market price moves quickly and skips over your limit price, your order may not be executed. In summary, a trailing stop allows you to set a stop price that follows the market price, while a trailing stop limit combines a trailing stop with a limit order. Both types of orders have their advantages and disadvantages, and the choice between them depends on your trading strategy and risk tolerance.
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• Nov 29, 2021 · 3 years ago
  Alright, let me break it down for you. A trailing stop is like having a virtual assistant that constantly monitors the market for you. It automatically adjusts your stop price as the market price moves in your favor. This means that if the market price goes up, your stop price will also go up, allowing you to lock in profits. On the other hand, if the market price goes down, your stop price will stay the same, protecting your gains. It's like having a safety net that moves with you. Now, a trailing stop limit is like having a safety net with a backup plan. It works in a similar way to a trailing stop, but it also adds a limit order to the mix. This means that once your stop price is reached, a limit order is triggered at a specific price. This gives you more control over the execution price of your order. However, keep in mind that if the market price moves too fast and skips over your limit price, your order may not be executed. So, to sum it up, a trailing stop is more flexible but may not provide as much control, while a trailing stop limit gives you more control but may have limitations in fast-moving markets.
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• Nov 29, 2021 · 3 years ago
  In the context of cryptocurrency trading, a trailing stop is a type of order that automatically adjusts your stop price as the market price moves. This allows you to lock in profits as the market price increases. However, if the market price suddenly reverses, the trailing stop may not be able to protect your profits effectively. On the other hand, a trailing stop limit is a combination of a trailing stop and a limit order. It allows you to set a stop price that follows the market price, but also sets a limit price that triggers a limit order. This gives you more control over the execution price of your order. However, if the market price moves quickly and skips over your limit price, your order may not be executed. So, the main difference between a trailing stop and a trailing stop limit in the context of cryptocurrency is the level of control over the execution price. A trailing stop provides more flexibility, while a trailing stop limit offers more control but may have limitations in fast-moving markets.
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