Need Guidance on Trailing SL Logic for Options and Stocks

General
1

Hi Team,

I need to understand the trailing Stop Loss (SL) logic for options and stocks, including how to implement it. A video tutorial would be great if available. Specifically, I’m looking at (ATR + fixed point) trailing SL.

For example:

  • Initial Entry: 100, SL: 70
  • Market moves to 110, SL trails to 75
  • Market moves to 120, SL trails to 80

In this case, for every 10-point favorable market move, the SL trails by 5 points.

Would the ATR-based trailing work the same way?

Thanks!

2

Hi @mahendra.beit ,

Yes, ATR-based trailing can work in a similar manner.

For example, suppose:

  • Entry Price = 100
  • Initial SL = 70
  • ATR = 8
  • Fixed buffer = 3

Then:

  • ATR + fixed buffer = 8 + 3 = 11 points

For a buy trade, trailing SL can be calculated as:

  • New SL = Current Price - 11

So if price moves:

  • Price = 110 → SL = 110 - 11 = 99
  • Price = 120 → SL = 120 - 11 = 109
  • Price = 130 → SL = 130 - 11 = 119

This means the stop loss keeps moving upward as price moves in your favor, based on the ATR value plus the fixed points buffer.

3

which one is best ATR or fixed SL move is best in this case and give me code level some idea on this ?

4

HI @mahendra.beit ,

The stop-loss movement method should be chosen based on the nature of the strategy.

Refer the below sample code :

if side == "BUY":
    sl_price = entry_price - sl_points
    if ltp >= entry_price + trail_start_points:
        steps = int((ltp - (entry_price + trail_start_points)) // trail_step_points) + 1
        new_sl = entry_price + (steps * trail_move_points)
        sl_price = max(sl_price, new_sl)

elif side == "SELL":
    sl_price = entry_price + sl_points
    if ltp <= entry_price - trail_start_points:
        steps = int(((entry_price - trail_start_points) - ltp) // trail_step_points) + 1
        new_sl = entry_price - (steps * trail_move_points)
        sl_price = min(sl_price, new_sl)