ROE trailing

How to work with ROE trailing for margin trading.

To increase the profitability of a margin position, you can use ROE trailing to trail for a better close price.

The basic concepts are exactly the same as regular buy and sell trailing, with three differences:

  • Trailing ranges are based on a percentage of the unrealized ROE for the position. This means that the trailing limits get wider when unrealized ROE increases.

  • Instead of trailing prices, changes in unrealized ROE are trailed.

  • The only dependency for ROE trailing is that it starts when the minimum ROE target is reached. Other factors like confirming indicators play no role.

Because trailing is completely based on ROE, and not on price, you must use larger trailing limits than with other types of trailing.

Setting a ROE Limit of 1 means that when your unrealized ROE decreases with 1% (i.e. from 1.00 to 0.99), the position will be closed. A low setting like this hardly allows for trailing.