What does "Trailing Stop buy Order" on Bitstamp mean?

Question

a Trailing Stop limit Order is clear in my mind. You want to sell your stock when the price starts to fall after reaching a max; or you want to buy a stock after the price starts to rise after a minimum. So far so good.

Bitstamp however only has the trailing options for stop loss orders (see pic).

This does not make sense in my mind: "I would want to wait for a minimum price and than sell when it starts to grow again?" Non sense. The same non sense applies for stop buy trailing orders.

In the picture bellow i plot 4 graphs with MY UNDERSTANDING of these options.

Please help me understand what Bitstamp means with that.

Thx a lot!

Answer 1

You might have been confused about what a "Trailing Stop Loss" really is. (Or I do missunderstood your question.)

The answer can be found on Bitstamp's website: https://www.bitstamp.net/article/stop-orders-and-trailing-stop-orders/

What is Trailing Stop Order and how to use it?

The trailing stop is more flexible than a fixed stop loss, since it automatically tracks the bitcoin’s price direction and does not have to be manually reset like the fixed stop loss.

For example: Market price of bitcoin is $480 and you placed a Stop Sell Order at $450, which is in our case $30 below the current market price. Suppose price of bitcoins suddenly increases to $550. You are now in chance of “locking in” even bigger profit by manually repositioning your Stop Sell Order to higher price.

Repositioning your Stop Order can be done automatically for you by enabling “Trailing Stop” function. In our case Trailing Stop Order will automatically reposition active Stop Order if price of bitcoin increases while maintaining spread of $30 between the bitcoins spot price and Stop Order.