Working of Trailing Stoploss

Can someone from zerodha explain in detail, the working of Trailing Stop loss? Here are my specific questions.

  1. Is it a functionality provided by the broker or the exchange ? ie Who updates the trailing stop loss ?

  2. What is the frequency at which trailing stop loss is updated ?

  3. At each iteration how is the trailing stop loss computed ?

Here is my understanding (Which is differing from the observation on Zerodha and hence the question)

On each iteration (I assume the) broker checks if the trailing stop price has been reached

  • If Yes : the order is executed with a Market execution type approach
  • If No , the stop price is recalculated by using the latest close price and subtracting the trailamount distance
  • If the new price goes up, it is updated
  • If the new price would go down (or not change at all), it is discarded

A similar thing is explained on -

But what is observed on Zerodha is similar to what is described in Understanding Trailing Stop Loss in BO

Any insight on this is greatly appreciated.



It is based on LTP. If LTP changes in your favor, stoploss would be updated as given by trailing. Sometimes if LTP is changing very fast trailing would miss by few basis points.

As given by user.

Thanks Siva for the quick response. Some follow up questions.

Let’s say Stock Price is 100, Buy Price is 100 and trail amount is 2. When the LTP moves to 101, 103, 105 will the corresponding trailing stop order be 99, 101, 103 ?

Not this way, if LTP is 102, sl moves to 100, if ltp moves to 103 then sl stays at 100 only. For sl to goto 102 LTP has to move to 104. I hope you got it now.