Webull has emerged as a popular platform for both novice and experienced traders, offering a robust set of tools and a commission-free trading environment. One of the most powerful risk management tools available to traders is the trailing stop-loss order. This dynamic order type helps protect profits and limit losses by automatically adjusting your stop price as the market moves in your favor.
If you're looking to enhance your trading strategy on Webull, mastering the trailing stop loss is a crucial step. Let's dive in with a comprehensive, step-by-step guide!
How to Put a Trailing Stop Loss on Webull: A Comprehensive Guide
Step 1: Engage with Your Trading Goal – Why a Trailing Stop Loss?
Before we even touch the Webull app, let's talk about why you're here. Are you looking to:
Lock in profits as your winning trades climb higher?
Minimize potential losses in volatile markets?
Automate your exit strategy so you don't have to constantly monitor every trade?
If you answered yes to any of these, then a trailing stop loss is exactly what you need! It's a fantastic tool that offers flexibility and discipline in your trading. By setting one, you allow your winning trades to run while simultaneously protecting your capital if the market suddenly turns.
Step 2: Understand the Fundamentals of a Trailing Stop Loss
A trailing stop loss isn't your average, fixed stop loss. It's a dynamic order that moves with the price of your asset.
Sub-heading: What is a Trailing Stop Loss?
A trailing stop loss is a type of stop order where the stop price is set at a specific percentage or dollar amount below the market price for a long position (or above for a short position). As the market price moves in a favorable direction, the stop price automatically adjusts, maintaining that set distance. However, if the market price reverses and falls to (or below) your trailing stop price, the order triggers, typically as a market order, selling your position.
Sub-heading: Key Concepts: Trail Amount vs. Trail Percentage
On Webull, you'll generally have two ways to define your trailing stop:
Trail Amount ($): This sets a fixed dollar amount below the highest price reached. For example, if you set a $0.50 trail amount on a stock currently at $10.00, your initial stop would be $9.50. If the stock goes to $10.50, your stop moves to $10.00. If it then falls to $9.99, your order triggers.
Trail Percentage (%): This sets the stop price as a percentage below the highest price reached. If you set a 5% trail percentage on a $10.00 stock, your initial stop is $9.50. If the stock rises to $10.50, your stop moves to $9.975 (5% below $10.50). If it then drops to $9.975 or below, your order triggers.
Step 3: Navigating Webull to Place Your Trailing Stop Loss
Now, let's get hands-on with the Webull platform!
Sub-heading: Accessing the Trade Screen
Open the Webull App: Launch the Webull application on your mobile device.
Locate Your Position/Stock:
If you already hold a position, go to your "Positions" tab (usually at the bottom of the screen). Tap on the stock you want to apply the trailing stop loss to.
If you're placing a new trade, search for the stock symbol in the search bar and tap on it.
Tap "Trade": Once on the stock's detail page, you'll see a prominent "Trade" button. Tap it to open the order entry screen.
Sub-heading: Selecting the Order Type
Choose "Sell" or "Buy":
For a long position (you own the stock and want to protect profits), select "Sell".
For a short position (you've sold borrowed shares and want to protect against price increases), select "Buy".
Note: Trailing stop losses are primarily used for managing existing positions or for specific strategies on entry, but the typical use case is for exiting a position.
Change Order Type to "Trailing Stop" or "Trailing Stop Limit":
On the order entry screen, you'll see "Limit" or "Market" as the default order type. Tap on this to bring up a list of available order types.
Look for "Trailing Stop" or "Trailing Stop Limit". Webull offers both.
Trailing Stop (Market Order): When triggered, it converts into a market order and aims to fill at the best available price. This offers more certainty of execution but no price guarantee.
Trailing Stop Limit: When triggered, it converts into a limit order. This provides a price guarantee (you won't sell below your limit price) but no guarantee of execution. You'll need to set a "limit offset" or "specified spread" in addition to your trail amount/percentage. For most users, especially beginners, the "Trailing Stop" (market order) is simpler to understand and use.
Step 4: Configuring Your Trailing Stop Parameters
This is where you define how your trailing stop loss will behave.
Sub-heading: Setting the Trail Amount or Percentage
Input the Quantity: Enter the number of shares you want the trailing stop loss to apply to.
Define Your Trail:
You'll see a field for the "Trail Amount" or "Trail Percentage." Webull usually has a toggle (often a "%" or "$" symbol) next to this field that allows you to switch between setting a dollar amount or a percentage.
Carefully consider your risk tolerance and the stock's volatility when choosing this value.
For example, if you set a 2% trailing stop on a stock at $50, your initial stop is $49. If it rises to $52, your stop moves to $50.96. If it falls to $50.96, it triggers.
If you set a $1.00 trailing stop on a $50 stock, your initial stop is $49. If it rises to $52, your stop moves to $51. If it falls to $51, it triggers.
A word of caution: Setting the trail too tight (small percentage/amount) might lead to premature exits on minor price fluctuations. Setting it too wide might expose you to larger losses than desired.
Sub-heading: Time-in-Force (TIF)
Select TIF: This determines how long your order remains active.
Day: The order will only be active for the current trading day. If not executed by market close, it will be automatically canceled.
GTC (Good-Til-Cancelled): The order remains active until it's executed or you manually cancel it. Be mindful that trailing stop orders on Webull may have specific expiry rules, often defaulting to Day for trailing stop market orders, and possibly GTC for trailing stop limit orders on some assets/regions. Always double-check Webull's specific policy for your region and asset type.
Sub-heading: Trigger Price Type (for Trailing Stop Limit)
If you chose "Trailing Stop Limit," you might have an additional option to select the "Trigger Price Type":
Current Market Price
Bid Price
Ask Price
This defines which price Webull uses to calculate and adjust your trailing stop. For most users, the default "Current Market Price" is sufficient.
Sub-heading: Specified Spread (for Trailing Stop Limit)
Also for "Trailing Stop Limit" orders, you'll need to set a "Specified Spread" or "Limit Offset." This is the difference between the triggered stop price and the limit price of the order that gets placed.
For a sell trailing stop limit: Limit Price = Trailing Stop Price - Specified Spread. (e.g., if trailing stop is $50, and spread is $0.10, limit order is placed at $49.90).
For a buy trailing stop limit: Limit Price = Trailing Stop Price + Specified Spread. (e.g., if trailing stop is $50, and spread is $0.10, limit order is placed at $50.10).
This spread helps to account for potential slippage but also introduces the risk of the limit order not being filled if the price moves quickly past your specified limit.
Step 5: Review and Confirm Your Order
Review All Details: Before submitting, carefully review all the parameters you've set:
Stock symbol
Quantity
Order type (Trailing Stop or Trailing Stop Limit)
Trail amount/percentage
Time-in-Force
(If applicable) Trigger Price Type and Specified Spread
Confirm the Order: If everything looks correct and aligns with your trading plan, tap the "Place Order" or "Sell" (or "Buy") button to submit your trailing stop loss.
Step 6: Monitoring and Managing Your Trailing Stop Loss
Once placed, your trailing stop loss is an active order.
Sub-heading: Tracking Your Order
You can typically find your active orders under the "Orders" tab in the Webull app. Here, you'll see the status of your trailing stop loss, including its current stop price as it adjusts.
It's a good practice to periodically check your active orders, especially in volatile market conditions.
Sub-heading: Modifying or Canceling Your Order
If market conditions change, or your trading strategy evolves, you might need to adjust or cancel your trailing stop loss.
To do so, go to your "Orders" tab, select the active trailing stop order, and you should see options to "Modify" or "Cancel" it.
Remember, once a trailing stop order is triggered, it either executes or converts into a limit order (for Trailing Stop Limit), and the original trailing stop condition is no longer active. If you need a new one, you'll have to place a new order.
Important Considerations and Best Practices
Regular Trading Hours: Trailing stop orders on Webull are typically only supported during regular trading hours (9:30 AM - 4:00 PM EST for US stocks). They often expire at the end of the trading day if not filled.
Slippage Risk: While trailing stops are excellent for risk management, they don't guarantee an exact execution price, especially if converted to a market order in fast-moving or illiquid markets. You might experience slippage, meaning your order executes at a price slightly different from your stop price.
Market Volatility: Be mindful of a stock's typical volatility when setting your trail amount/percentage. Too tight, and you might get stopped out prematurely; too wide, and you might take on more risk than intended.
Not for Options: Currently, Webull does not support trailing stop orders for options.
Practice with Paper Trading: If you're new to trailing stops or Webull, always practice first using Webull's paper trading feature. This allows you to understand how the order works without risking real capital.
10 Related FAQ Questions: How To...
Here are some quick answers to common questions about using trailing stop losses on Webull:
1. How to Check if My Trailing Stop Loss is Active? Go to the "Orders" tab in your Webull app. All your active orders, including trailing stop losses, will be listed there with their current status.
2. How to Set a Trailing Stop Loss on a Stock I Already Own? Go to your "Positions" tab, tap on the stock, then tap "Trade." Choose "Sell" and then select "Trailing Stop" (or "Trailing Stop Limit") as the order type.
3. How to Choose Between a Trailing Stop and a Trailing Stop Limit? A "Trailing Stop" converts to a market order and offers execution certainty (but not price). A "Trailing Stop Limit" converts to a limit order, offering price certainty (but not execution certainty). For beginners, "Trailing Stop" is simpler.
4. How to Decide the Right Trail Amount or Percentage? This depends on the stock's volatility and your risk tolerance. Analyze the stock's average daily range or historical price action. A wider trail accommodates normal fluctuations, while a tighter one provides closer protection.
5. How to Modify an Existing Trailing Stop Loss? Navigate to the "Orders" tab, select your active trailing stop order, and you should see a "Modify" option. You can then adjust the parameters as needed.
6. How to Cancel a Trailing Stop Loss Order? Go to the "Orders" tab, select the active trailing stop order, and tap the "Cancel" option.
7. How to Know if My Trailing Stop Loss was Triggered? You will receive a notification from Webull, and the order status in your "Orders" history will show as "Filled" (if executed) or "Cancelled" (if not filled or manually cancelled).
8. How to Use a Trailing Stop Loss for Short Positions? For short positions, you would place a "Buy" trailing stop. The stop price would be set a specified amount or percentage above the highest price the stock reaches, moving down as the price falls.
9. How to Avoid Prematurely Triggering My Trailing Stop Loss? Set a trail amount or percentage that allows for normal daily price fluctuations without triggering. Research the stock's historical volatility to determine an appropriate buffer.
10. How to Use Webull's Paper Trading for Trailing Stops? In the Webull app, go to "Menu" > "Paper Trading." You can then place mock trades and practice setting trailing stop losses without using real money. This is highly recommended for practice!
By diligently following these steps and understanding the nuances of trailing stop loss orders on Webull, you'll be well-equipped to manage your trades more effectively, protect your gains, and potentially minimize your losses in the dynamic world of stock market investing. Happy trading!
