Questrade.com | Trailing stop order example (shorting) | My study notes

Here is the article. 

 In addition to being used as ‘downside protection’ as a sell order, trailing stops are also commonly used as buy orders.

These can be used to buy an investment during an opportune time, or to reduce risk during a short position.

Trailing stop buy orders work the exact same way as trailing stop sell orders, except the trigger price will be above the current market price, not below it.

Let’s check out an example:

Suppose you’re looking to buy shares of company XYZ that trades at $20 per share, and are looking for an opportunity to catch an ‘upswing’ in price after a long decline. You could enter a trailing stop buy order with a 5% offset, and this ensures that your order will execute once XYZ has moved more than 5% upwards from the time you placed the order. (If XYZ rises immediately, your buy order would execute at $21, a 5% offset.)

If XYZ continues to decline to $15, your buy order will move downwards along with the market price to $15.75. If XYZ drops to $12, your buy order also moves down to $12.60. But if XYZ then rises to $15 right away, your buy order will trigger at your offset price of $12.60. (Since this was a more than 5% rise in market price.)

And one more example if you're shorting:

Suppose you’ve shorted shares of ABC at $10 per share, and would like to use a trailing stop buy order to protect your investment from an unexpected rise in price. You could set a trailing stop buy order with a $2 offset, this means if ABC rises by $2 at any time after you placed your trade, your shares would be ‘bought to cover’ your short position.

How to apply my case? 

When I sold 9500 shares of SABR stock at price $2.0/ share, I should set a trailings top buy order to protect my investment from an unexpected rise in price. 

Trailing stop buy order with a 0.10 offset, this means if SABR rises by $0.10 at any time after I placed the order, my shares will be 'bought to cover' my short position. 

SABR stock price continued to drop to $1.80/ share, and then went up to $3.0/ share, my order will be filled around $1.9/ share with 9500 shares. I can purchase extra shares since 950 US dollars are saved, so extra 500 shares can be purchased.