Kraken’s support documentation explains that a trailing stop sell order follows the market upward and triggers after price falls by a set amount or percentage from the high after order entry. A trailing stop buy works in the opposite direction, following the market down and triggering after a rebound from the low.
The tool is useful because it updates the trigger dynamically as price moves in the trader’s favor. That does not make it automatic risk management. The offset is the core decision: too tight and normal noise can close the trade; too wide and the order gives back more profit than the trader intended.
Before using the order, write down the position size, the maximum giveback, whether the close will be a market order or limit order, and whether the market normally has enough liquidity at the trigger time. Kraken also notes limits around active trailing orders, so active traders should check their order book before assuming every position has protection.
The best use case is a trade that has moved in the intended direction but still needs room to continue. The weak use case is replacing a planned stop with a trailing stop after the position is already under pressure.
Sources: Kraken trailing stop orders; Kraken trailing stop limit orders; Kraken order types hub. Risk notice: Stop orders can slip or execute differently during fast markets; this article is educational and not official account support.
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