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2006issue C021-4

Sell stops that trail support after the buy

The archive sets a Stop-loss order as soon as a buy fills, then raises a Trailing stop under newer support. Placement stays outside ordinary noise and a few cents below odd prices, because a sell stop becomes a market order if price trades through it.

  • A sell stop placed below the market becomes a market order when price trades at or through that level, so a gap or thin tape can fill worse than the intended price.
  • Placing a Stop-loss order immediately after a buy fill is presented as a way to cap an open loss and keep a later sell from being renegotiated under stress.
  • A Trailing stop is raised to just below the newest valley once price exceeds a prior peak, treating minor lows as Support and resistance until the stop is hit.
  • Stops sit a few cents below odd prices rather than round numbers, and a volatility floor of 1.5 times the prior month's average daily range keeps them outside ordinary noise.
Entries in this reading3 entries
Current trackTrailing stop87 readingsStop-loss order144 readingsSupport and resistance170 readings

Set the sell with the buy

A sell stop placed below the market becomes a market order when price trades at or through that level. A gap or thin tape can therefore fill worse than the intended price.

The archive presents placing a Stop-loss order immediately after a buy fill as a way to cap an open loss. It is also presented as a way to keep a later sell from being renegotiated under stress.

How far under the structure

In the ascending-triangle example, a stop under the nearest minor low is framed as a tighter loss than a stop under the pattern low. Both placements are described as staying inside a 10% or 15% loss band used for some volatile names.

A volatility floor of 1.5 times the prior month's average daily range is used so a stop is not parked inside ordinary noise. A three-day high-low shortcut is offered for the same check.

Stops are also parked a few cents below odd prices rather than round numbers. Those round levels are described as common Support and resistance, and as clustered-stop zones.

Trail the newest valley

The archive raises a Trailing stop to just below the newest valley once price exceeds a prior peak. Minor lows are treated as Support and resistance so the stop ratchets higher until it is hit.

In one worked trade, an entry stop-buy filled at 52.07 with a protective stop at 49.21, a 5.5% loss if triggered. That stop was later trailed to 51.07 and then 52.93 as price made new highs.

Check the target against nearby levels

An ascending-triangle measure-rule target is scaled to 75% of pattern height in a bull-market upward breakout. That target is then checked against nearby Support and resistance before a sell order is parked.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
14 of 36 in the Trailing stop track
20061-3 pp.Next on Trailing stopTreat a wave-3 label as unfunded until the stop rails are writtenWait for a 1/A upswing and a 38.2% to 50% 2/B Fibonacci retracement before treating a 3/C continuation as the working hypothesis.
All readings on this track · 36 readings
  1. 1988Half-day bars, a midpoint gate, and a bar-based trail
  2. 1989Packaging two-bar reversals into testable entry and exit rules
  3. 1989Weekly high and low averages as stop-and-reverse levels
  4. 1991Constant false-alarm rate for dominant-cycle stops
  5. 1992Tick-index extremes as continuation and turn hypotheses
  6. 1993Constructing layered stops from equity and structure
  7. 1993Filter crossovers with moving-average slope
  8. 1993Precommit stop bounds from equity and structure
  9. 1998Evaluating a trendline barrier that can only tighten a capped stop
  10. 1999Constructing common-number support and resistance
  11. 2001Four-step opening-hour bias and trailing stops
  12. 2004Make the trading system the star
  13. 2005A beginner stock case: stop, trail, and the pre-trade checklist
  14. 2006Sell stops that trail support after the buy
  15. 2006Treat a wave-3 label as unfunded until the stop rails are written
  16. 2008Test medium-term divergence with a trendline break and a trailing stop
  17. 2010Rule-based forex entry, stop and trail
  18. 2012Precommitting stops when one currency range templates another
  19. 2012Cat-ears as a downtrend continuation hypothesis
  20. 2013Three-average swing entry and a trailing average exit
  21. 2014Construct a dual quotient-copy trend filter under a frequency roof
  22. 2014Stop distance, size, and trailing swing invalidation
  23. 2014Long-only RSI pullback, reversal-bar-entry, and staged-trail construction
  24. 2015Dual-average regime, trigger candle, and trail as one daily script
  25. 2015Three-gate trend system: filter, trigger, and trailing stop
  26. 2016Construct HHLLS crossover and breakout entry rules
  27. 2017An appointment-trade around a scheduled political close
  28. 2017Golden-cross breakout rules for a swing entry
  29. 2017Breakout confirmation above round numbers, with nines as sell shelves
  30. 2018Classify diamond geometry before the breakout
  31. 2019When trails and stops betray the support read
  32. 2019One-triggers-the-other pairs for preplanned swing entries
  33. 2019One-triggers-the-other orders for a breakout and its stop
  34. 2019When the second decision unbounds planned risk
  35. 2020Last-Hour Breakout With a Same-Session Flatten
  36. 2020Couple the slow period to stop-loss and trailing-stop settings
By fieldStops and loss limits40 readingsBy year200683 readings
All 87 readings tagged Trailing stop
Also on Trailing stop5 readings
1993Precommit stop bounds from equity and structure1999Constructing common-number support and resistance2019When trails and stops betray the support read1986The stop, the size, and the acceptable loss as one pre-entry gate1991Set the first stop from a capital-scaled MAE histogram