Trailing Stops

Trail to protect open profit while giving the trend room. The stop only moves in the trade's favour.

Calculator

python3 ../position-sizing/scripts/risk.py trail --entry 750 --stop 720 --highest-close 845 \
    --atr 14 --swing-low 805 --highest-high 850 --sma20 812 --current-stop 760

It reports R gained, the ladder stage, every candidate level, and the recommended stop (never below --current-stop). Get ATR, SMA20/EMA50 and the latest swing low from ta.py summary.

The R-multiple ladder (default)

1R = entry − initial stop.

Stage	Open profit	Stop rule	Why
Fresh	0 – 1R	Keep the initial stop	Trailing early gets shaken out by noise
Early	≥ 1R	Move to breakeven (entry; add costs for true breakeven)	The trade can no longer lose money
Building	≥ 2R	Highest close − 1.5 × ATR(14)	Gives room while banking most of the move
Runner	≥ 3R	Below the latest higher low (structure)	Follows the trend's own rhythm

Take the highest qualifying level (the tightest) and never lower it.

Individual methods

Method	Rule	Best for
ATR trail	Highest close − k × ATR (k 1.5 tight / 2 standard / 3 loose)	Trending but volatile stocks
Structure	Below each new higher low	Clean stair-step trends
MA trail	Daily close below SMA20 (fast) / EMA50 (steady) / SMA200 (positional) → exit	Smooth grinders
Chandelier	Highest high − 3 × ATR	Explosive runners, momentum names
Partial + trail	Book 30–50% at 2R or the 127.2% Fib, trail the rest	Results-season or event-heavy names

Execution in India

• Update daily after the close using the official close (30-min VWAP), not intraday wicks. Modify the GTT for delivery holdings, or re-place the SL each morning because SL orders expire daily.
• For F&O positions, trail on the underlying or futures chart and execute with SL-limit orders. Brokers' old bracket/cover orders with trailing are largely discontinued.
• Before results, Budget or RBI policy days, tighten to the 1.5 × ATR level or book partial profits. A gap can jump past any trail.
• Tax-aware trailing: if a delivery position is a few weeks from turning long-term (over 12 months), a slightly looser trail may be worth it because the tax rate drops from 20% to 12.5%. Quantify it with indian-tax-for-traders.

Rules

1. A ratchet: up only (longs), down only (shorts).
2. Evaluate on daily closes; exit in the closing session or at the next open when breached.
3. Don't overtighten: a trail closer than about 1 ATR gets hit by ordinary pullbacks.
4. Choose the method before the trade and stick to it.

Output

Gained: x.xR → stage: [..]
Candidates: breakeven ₹.. | ATR(1.5x) ₹.. | structure ₹.. | chandelier ₹.. | SMA20 ₹..
New stop: ₹S (locks +y.yR) → update GTT trigger ₹S / limit ₹S−b
Next review: after today's close; event risk: [results on dd-mmm]