BitMex Trailing Stop Strategy

The BitMex Trailing Stop Strategy tool simulates the trailing stop mechanism used on the BitMex exchange to help traders determine the optimal stop-loss width and visualize dynamic exit levels for their positions.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This section also focuses on how main settings affect the indicator interpretation and output.

Traders can use this strategy to identify the amount of "breathing room" a trade requires to avoid premature stop-outs. By plotting a dynamic line on the chart—colored green for long bias and red for short bias—the script shows exactly where a trailing stop would sit based on historical price movements.

• Backtesting Stop Widths: Users should adjust the Long and Short Offset values to see how different widths would have handled past volatility.
• Strategy Integration: While this script generates entry and exit signals when price crosses the trailing stop, it is highly effective when integrated into existing strategies to act as the primary risk management component.
• Visual Interpretation: When the price is above the trailing stop, the trend is considered bullish; when price crosses below the line, it triggers a stop/short condition.

Details

The script is a refactored version of the original code by @rthomson. It calculates the trailing stop level by tracking price extremes using granular data.

The logic relies on fixed offsets applied to the highest high (for longs) or lowest low (for shorts) reached during a trend. To ensure accuracy, the script utilizes request.security to reference 1-minute price data, allowing it to capture intra-bar price action that might be missed on higher timeframes. The trailing stop level only moves in the direction of the trade (upwards for longs, downwards for shorts) and remains stationary if price moves against the position, until the price eventually breaches the stop level, signaling a trend reversal.

Settings

The settings are focused on defining the distance between the price and the trailing stop:

• Long Trailing Stop Size: Determines the distance (in price units) the stop-loss maintains below the highest price reached during a long trend.
• Short Trailing Stop Size: Determines the distance (in price units) the stop-loss maintains above the lowest price reached during a short trend.

FAQ

How do I determine the best offset values for my chart? The optimal offset depends on the volatility of the asset and the timeframe you are trading. It is recommended to use the strategy tester to experiment with different values until the stop-loss avoids "noise" while still protecting capital.

Can this script be used for automated trading? Yes, the script includes optimized alerts for both long and short crossings, which can be connected to external execution platforms.

How do I access the BitMex Trailing Stop Strategy? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.