How does a trailing stop work?
A trailing stop is a stop whose trigger follows the price as it moves in your favour, a set distance behind the best price so far, and never moves back. On Hyperliquid it follows the mark price, the distance can be a price or a percentage, and when the mark pulls back by that distance it sends a market order.
- A trailing stop keeps its trigger a set distance behind the best price since it became active, and moves only when that best price improves.
- On Hyperliquid it follows the mark price. The best mark so far is its watermark, and the distance can be a fixed price or a percentage.
- On the long from the worked examples, 40 units at 100.00, a trail of 2.5% behind a best mark of 104.00 triggers at 101.40, for +$56.
- When it triggers it sends a market order, so in a fast move the fill can land past the trigger.
- In BuildTrade™ the Trail order is for perpetuals, live only and always reduce-only. Hyperliquid holds it, so it keeps working when the app is closed.
What a trailing stop is
An ordinary stop sits at one price until it triggers or is cancelled. A trailing stop moves. On a long it starts a set distance below the price, and each time the price makes a new high, the trigger moves up behind it. When the price falls, the trigger stays where it is. If the price falls back by the full distance from its best level, the stop triggers.
On a short it works the other way up: the trigger sits above the price and moves down each time the price makes a new low.
The watermark and the distance
Hyperliquid calls the best mark price since the trailing stop became active its watermark. For a stop that closes a long it is the highest mark; for one that closes a short, the lowest. The trigger is the watermark less the distance on a long, or plus it on a short, and it is worked out again only when a new watermark is set. During a pullback it does not change.
The distance can be a fixed price or a percentage. In Hyperliquid’s examples, a stop closing a long with a fixed distance of 10 has its trigger at 110 after a high of 120, and a stop closing a short with a distance of 10% has its trigger at 88 after a low of 80.
What happens when it triggers
When the mark price reaches the trigger, the trailing stop sends a market order for its size. Like any market order it fills at whatever the book offers, so in a fast move the fill can land past the trigger. Stop market and stop limit shows how far past it can go when the price jumps.
A trailing stop on Hyperliquid can also open a position. In Hyperliquid’s example, a trailing buy that becomes active at 100 with a distance of 10 follows the price down to a low of 80, so its trigger is 90, and a rise back to 90 opens a long.
The trade-off in the distance
A tight trail stays close to the price, so it keeps more of a gain when the price turns, and an ordinary pullback is more likely to trigger it. A wide trail sits through more of the swings and gives back more before it fires.
No one distance suits every market. The size of a market’s ordinary pullbacks is what any distance is measured against: a trail tighter than them is triggered by them.
On Hyperliquid
On Hyperliquid the trailing stop follows the mark price, not the last trade, so a single trade away from the mark does not move it. Mark price and oracle price explains how the mark is built.
In BuildTrade™, Trail in the order ticket places a trailing stop on a perpetual, with the distance as a percentage from 0.1% to 50%. Hyperliquid holds it, so it keeps working when the app is closed, and the app sends it as reduce-only, so it only ever shrinks or closes a position. The confirmation reads “Trails 1.5% behind the best price” for a trail of 1.5%. Trailing stops are live only: paper trading has no venue to hold one, and the app says so.
A trail of 2.5% on one long
Example numbersThe long from the worked examples: 40 units at 100.00, with a trail of 2.5% behind the best mark. Each row is a different best mark before the pullback, with the stop filled at its trigger. Fees and slippage left out.
- Entry
- 100.00
- Units
- 40
- Trail distance
- 2.5%
| Best mark | Trigger | Result |
|---|---|---|
| 100.00 | 97.50 | −$100 |
| 101.50 | 98.96 | −$42 |
| 104.00 | 101.40 | +$56 |
With no gain at all the trail never moves, and it is the same as a fixed stop at 97.50: −$100. With a best mark of 104.00 it closes at 101.40 for +$56, which is $104 less than closing at the best mark.
Mistakes that cost traders money
- Expecting it to move back.
The trigger moves only when the price makes a new best. During a pullback it stays where it is.
- Expecting the fill at the trigger.
It sends a market order when triggered, so in a fast move the fill can land past the trigger.
- Watching the last trade instead of the mark.
On Hyperliquid it follows the mark price. A spike in the last trade that the mark does not share neither moves it nor triggers it.
- Picking a distance without looking at the swings.
A trail tighter than the market’s ordinary pullbacks is triggered by them. Measure a few before choosing one.
- Forgetting the gain it gives back.
A trailing stop never closes at the best price. At best it closes the full distance below it.
Try it in BuildTrade™
On the Trade screen, measure a few ordinary pullbacks on the chart as a percentage of the price, then compare them with the trail distance you have in mind. A trail tighter than those pullbacks would have triggered on each of them.
Mark price · Market order · Reduce only · Stop order · Trailing stop
Trailing stops, Hyperliquid Docs (read October 20, 2026).
Order types, Hyperliquid Docs (read October 20, 2026).
BuildTrade™ is independent of, and not endorsed by, Hyperliquid.