Trailing Limit (RM-S)
In order to provide protection from the execution of a market order at a less beneficial price in a soft market, the Trailing Stop order was expanded to include the ability to enter deviations from the Limit Price - the Trailing Limit variant.
This version of the order during the activation of a standard buy or sell order located (shown) at the depth of the market also includes the Limit Price, which is the deviation that is lower (for a sell order), or higher (for buy orders) than the fixed price for the last settled Stop Price intelligent order.
- A Trailing Limit order is similar to a Trailing Stop order and is a Fio banka product.
- In terms of parameters (as opposed to bids and offers) this includes the Stop Price.
- Conversely (from the Stop Price) a Limit Price is also entered.
- The order (Stop Price) reacts to changes in bids and offers.
Example Trailing Limit sell order
An investor wants to sell 200 shares of ČEZ, which were purchased at CZK 700 in the past in order to realize a profit. The investor considers CZK 870 to be the next upcoming maximum in the price but the price may strengthen slightly during the course of the day. The investor places a Trailing Limit sell order.
- Current price at order placement: CZK 869.40
- Best bid: CZK 869
- Entered Stop Price deviation: CZK 3
- Entered Limit Price deviation: CZK 2
At order placement:
Once the order is sent the initial Stop Price at CZK 866 (869 - 3) is generated. Also the initial Limit Price at CZK 864 is generated. the order then waits in the background of the Fio banka system and monitors market developments. If the price falls and the best bid reaches a value of CZK 866 or lower the sell order with a Limit Price of CZK 864 is activated.
| Price (CZK) | Cumulative number of shares | |
| 874.10 | 1,936 | Offer |
| 873.20 | 1,627 | |
| 872.90 | 1,423 | |
| 871.80 | 423 | |
| 871.00 | 123 | |
| 869.40 | Last trade | |
| 869.00 | 89 | Bid |
| 867.00 | 691 | |
| 866.10 | 1,324 | |
| 866.00 | 6,589 | |
| 865.80 | 6,895 |
With increasing bids:
Share price rises to CZK 875.30. The best bid is CZK 875.10 leading to an increase in the Stop Price to CZK 872.10 (875.10 - 3). The Limit Price is CZK 2 lower, or at CZK 870.10.
| Price (CZK) | Cumulative number of shares | |
| 877.10 | 1,456 | Offer |
| 876.30 | 1,123 | |
| 875.90 | 687 | |
| 875.50 | 368 | |
| 875.30 | 174 | |
| 875.30 | Last trade | |
| 875.10 | 158 | Bid |
| 875.00 | 597 | |
| 874.60 | 995 | |
| 873.10 | 1,624 | |
| 872.80 | 2,365 |
Stock price falls and approaches Stop Price
The best bid falls to CZK 873.20. The Stop Price and Limit Price remain fixed to the maximum values of CZK 872.10 and CZK 870.10. The order is not yet activated as the best bid is still higher than the current Stop Price.
| Price (CZK) | Cumulative number of shares | |
| 875.50 | 1,698 | Offer |
| 875.10 | 1,257 | |
| 875.00 | 968 | |
| 874.40 | 578 | |
| 873.90 | 50 | |
| 873.40 | Last trade | |
| 873.20 | 200 | Bid |
| 872.70 | 748 | |
| 871.90 | 1,698 | |
| 871.10 | 2,325 | |
| 871.00 | 2,876 |
The best bid drops below the current Stop Price:
The best current bid drops below CZK 872.10, which is the highest achieved Stop Price. An order to sell 200 shares is immediately sent to the market with a Limit Price of CZK 870.10, which is paired to the best bid. The trade is divided into two. The first sells 80 shares at CZK 872 and the second sells the remaining 120 shares at CZK 871.60.
| Price (CZK) | Cumulative number of shares | |
| 875.00 | 3,254 | Offer |
| 874.60 | 1,632 | |
| 874.00 | 965 | |
| 873.40 | 550 | |
| 873.00 | 100 | |
| 872.50 | Last trade | |
| 872.00 | 80 | Bid |
| 871.60 | 362 | |
| 871.20 | 589 | |
| 870.50 | 1,214 | |
| 870.40 | 2,987 |
Result
The investor does not need to search the market continuously on the computer, the system automatically sells the shares for a price that is higher than when the order was placed. A Trailing Limit order is best used in situations where the market is relatively calm.
