I don't use Questrade but in general, a trailing stop limit works like this: You set the stop as 10%, so for example if your stock is $100 right now, the stop would be at $90. When the stock hits $90, the stop is triggered. At that point, your limit comes into play. So if you set your limit offset to 10 cents, you would sell the stock at $89.90 or above. According to the Questrade help file, the maximum offset in Canadian markets is 9% of the stock price, so pick your offset according to how much risk you're willing to take, as long as it's < 9%.

Trailing stop limit order | Questrade

questrade-support.secure.force.com

https://questrade-support.secure.force.com/mylearning/view/h/Investing/a2E3MGEwMDAwMDBYYWVaQUFT

Trailing stop orders (without limit) just enter a market order to sell when the stop is triggered, which can lead to very low fills if the stock has gapped down. Although you are complaining about this not being available to you, to me this is a feature and not a bug. If there's a flash crash I don't want to sell my Amazon for $10/share just because it gapped below my stop price of $3500.

 

Hi Spudd,

Thanks for the replies. I've only been "in the game" since about May of this year so still very much a newb. That's why I'm looking for advice/guidance on TSL orders in order to minimize profit losses should the stock market decide to take a s**t this year or next (some pundits think it's only a matter of time before we see a big correction).

You have a point about the gap down effect. Perhaps TSL orders aren't such a bad thing after all. Do you use them? If so, do you use a $ or % Limit Offset? Based on the example above that I cited could you please let me know what you think a reasonable $ Limit Offset would be to use on that TSL order? I mean, there's an upper limit (9%) but is there also a general rule to follow for how small the lower limit should be? I'm not looking at this from a risk perspective (although of course I realize this is an important factor) but more from the perspective of what a realistic Limit Offset should be that will still trigger a sell order should (God forbid) the stock gap down. Speaking of which, how often do you see/have you seen this happen? TIA.

 

I have used them in the past, but not lately. I normally use a $ offset just because it's easier for me to do the math in my head that way.

I re-read your original post but I can't see an example there, so I can't speak to what would be a good offset. Personally, assuming it's a normal priced stock of like $30 or more, I'll usually go with an offset of like 10-15 cents. If there's a gap down then my sell might not take place in that case (like let's say the stock was $50, then they released bad news overnight and the next morning it opened at $30, and my stop was at $40). If that happened I'd be stuck with the $30 stock. But generally it will be a milder downward trend and you'll get the price you wanted.

I use WealthSimple Trade for my "fun" investing and on there you have to set the offset to zero - i.e. your limit is the same as your stop. I hate that. I want a little leeway in case it doesn't go back up to the stop price.

 

The example I cited was a $100 stock and a Trailing Stop of 10%. So, if the stock dropped to $90 or less than a sell order may be triggered. I haven't been trading long enough to see any stocks crash/gap down a huge percentage overnight. So, I don't see WealthSimple's Limit Offset of 0 to be such a bad thing, per se. I have all of my TSL orders currently set to use the minimal Limit Offset possible, but now you have me wondering if I shouldn't re-think that and give them more leeway. How often when you use an offset of 10-15 cents have your sell orders been triggered? I guess what I'm asking is based on your experience with TSLs is that the ideal range that works?

 

I think your limit offset should be at least as large as the average spread. In a fast drop you probably want it even wider.

Consider this example:

One day, your stock (originally purchased at $100) trades at $90. Your stop triggers and becomes a limit sell order for $89.9995 ($90-0.0005)

But at that point, the spread could be quite wide. The bid could be $89.90 and ask $90.10 so your now limit order never actually executes.

 

So, do you have a general rule when it comes to Limit Offsets as far as $ value goes? Would you recommend an Offset of $.20 or does it depend on the price of the stock at the time in which a % may work better? My concern is exactly as you described - that I set too low of a Limit Offset that a sell order is never triggered. Just looking for guidance on what a reasonable LO should be so the order will actually execute should the stock fall below the Stop Limit value.

 

Hi all,
I’m also a newbie to DIY investing (Canada) and found this discussion very useful as I’m also struggling with Trailing Stop Limit orders (TSL) on Questrade. I set up a practice account to try TSL orders in hopes I would see step by step how the process worked, but no joy. Only one of my practice TSL entries worked as I expected and sold as intended. Other TSL orders did not trigger a sale, however the 1st step of coverting to a limit sale did execute then it just sat. My best guess is that my offset value of .10 was too small and in the micro-seconds it took for the order to convert from TSL to Limit, the bid/ ask had already dropped below the Limit created by the TSL. So in effect, the stock would only have sold if the price had started to increase and climbed back to my limit sale price.
Now I’m thinking that emphasis on the offset (in effect the limit) may be a red herring for me. My objective in to use TSL is take advantage of the “trail up” feature in event of more upside yet protect the downside in event of major correction. As far as I know a regular “Stop Limit” order doesn’t let the Limit amount trail up ( but readily admit I may be confused). I’ve mulled on TSL for a bit, and now feel it may be best set the offset to the max 9%. With that configuration, when the TSL converts to a limit, it has 9% window in which to execute the Limit price (versus the tiny windows of a few cents e.g. .10 in my practice experiment). Since I’d want to sell anyhow if the limit (offset) was triggered (as presumably it’s a major correction) it’s irrelevant to me at that point. if the sale price varies by a few pennies one way or another as I just want out... so to speak. Regardless, the sale will execute at Limit (offset) or BETTER anyway, so trying to control it by entering micro offset amounts doesn’t seem helpful and actually becomes counterproductive. I realize that if the downside jump was more than the 9% I’d be outta luck, but that’s the risk in all this.
It’s hard to force TSL in the practice account as that account uses day old data (far as I can figure), so one has to reverse engineer the previous days sales to find a stock that trended down severely and then identify practice TSL entry values to force the TSL trade to happen.
I’m hoping my story makes sense. I haven’t tried it in my live account because I’m not confident I’ve got it figured out. I welcome feedback on my thoughts. Thanks.

 

Hi all,
I’m also a newbie to DIY investing (Canada) and found this discussion very useful as I’m also struggling with Trailing Stop Limit orders (TSL) on Questrade. I set up a practice account to try TSL orders in hopes I would see step by step how the process worked, but no joy. Only one of my practice TSL entries worked as I expected and sold as intended. Other TSL orders did not trigger a sale, however the 1st step of coverting to a limit sale did execute then it just sat. My best guess is that my offset value of .10 was too small and in the micro-seconds it took for the order to convert from TSL to Limit, the bid/ ask had already dropped below the Limit created by the TSL. So in effect, the stock would only have sold if the price had started to increase and climbed back to my limit sale price.
Now I’m thinking that emphasis on the offset (in effect the limit) may be a red herring for me. My objective in to use TSL is take advantage of the “trail up” feature in event of more upside yet protect the downside in event of major correction. As far as I know a regular “Stop Limit” order doesn’t let the Limit amount trail up ( but readily admit I may be confused). I’ve mulled on TSL for a bit, and now feel it may be best set the offset to the max 9%. With that configuration, when the TSL converts to a limit, it has 9% window in which to execute the Limit price (versus the tiny windows of a few cents e.g. .10 in my practice experiment). Since I’d want to sell anyhow if the limit (offset) was triggered (as presumably it’s a major correction) it’s irrelevant to me at that point. if the sale price varies by a few pennies one way or another as I just want out... so to speak. Regardless, the sale will execute at Limit (offset) or BETTER anyway, so trying to control it by entering micro offset amounts doesn’t seem helpful and actually becomes counterproductive. I realize that if the downside jump was more than the 9% I’d be outta luck, but that’s the risk in all this.
It’s hard to force TSL in the practice account as that account uses day old data (far as I can figure), so one has to reverse engineer the previous days sales to find a stock that trended down severely and then identify practice TSL entry values to force the TSL trade to happen.
I’m hoping my story makes sense. I haven’t tried it in my live account because I’m not confident I’ve got it figured out. I welcome feedback on my thoughts. Thanks.

Hi RR,

As a preface, I'd like to state that I'm also nearly new to trading so I may have to tweak my methods if they prove not to work. Also, I have to disagree with Spudd's claim that the bid/ask spread for big, liquid stocks is only 1-2 cents. That hasn't been my experience; the difference in the spread on any given day can be several dollars. Spudd, please chime in after reading this reply if you have any advice or clarification on guidance for setting what you feel is a proper Limit Offset; TIA.

I always set a Trailing Stop percentage of 10%. Now, this can backfire for stocks whose price is volatile and may swing as much as 25% from week to week (this has happened to me once already). Speaking of which, does anyone know if there are any web sites that show you a history of a stock's price volatility from week to week? This would help me determine if I should make a Trailing Stop percentage more or less.

As far as the Limit Offset goes I now set it according to the stocks's average daily bid/ask spread using a fixed $ amount. Keep in mind that if equals more than 9% of the value of the stock you'll have to adjust it down as that's the limit. So, for example if a $50 stock's bid/ask fluctuates between $4.95 and $50.70 on a given day that tells me that I should set a Limit Offset of 75 cents (50.70 - 4.95). If I understand properly how Limit Offsets work (based on this example and with a Trailing Stop of 10%) if there's a flash drop below $45 as long as it's still more than $44.25 the sell order will be triggered.

It's a balancing act. Again, using the example above, if you use too small of a Limit Offset (say 10 cents) and the stock drops in value below $44.90 then your sell order won't be triggered and the stock could continue to free fall and you could lose a lot of money. That's my understanding of how Limit Offsets work (again to anyone reading this: please let me know if I'm right about how they work, thanks). Now, the odds of a stock having a flash drop equal to the bid/ask spread for the day is highly unlikely. So, a person could probably get away with a much smaller Limit Offset but I'm not aware of any way to determine this. IMO, the only way to hedge your bets that your sell order has a good chance of being triggered (God forbid the stock starts to tank) is to specify a Limit Offset equal to the bid/ask spread on any given day.

One exception may be if the company's quarterly earnings report is released that day and comes in under - this always causes a stock to dip in value, even if only temporarily).