# Can a Trailing Stop-Loss Be Used to Enter a Short Position? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## Can a Trailing Stop-Loss Be Used to Enter a Short Position?

Yes, a trailing stop-loss can be used to manage a short position. In this case, the stop price trails the asset's price downwards.

The stop is set at a percentage or fixed amount above the market price. If the price falls, the stop price also falls, locking in profit.

If the price rises, the stop price remains fixed, protecting the position from a reversal.

- [What Is a ‘Liquidation Price’ and How Does It Relate to the Stop-Loss?](https://learn.greeks.live/path/what-is-a-liquidation-price-and-how-does-it-relate-to-the-stop-loss/)

- [What Is the Difference between a Stop-Loss Order and a Stop-Limit Order in Crypto Trading?](https://learn.greeks.live/path/what-is-the-difference-between-a-stop-loss-order-and-a-stop-limit-order-in-crypto-trading/)

- [How Does Order Book Liquidity Influence the Choice between Stop-Loss and Stop-Limit?](https://learn.greeks.live/path/how-does-order-book-liquidity-influence-the-choice-between-stop-loss-and-stop-limit/)

- [How Does a ‘Stop-Loss’ Order Help Manage the Risk of Liquidation?](https://learn.greeks.live/path/how-does-a-stop-loss-order-help-manage-the-risk-of-liquidation/)

- [Is It Safer to Set a New Allowance or to First Revoke and Then Set a New One?](https://learn.greeks.live/path/is-it-safer-to-set-a-new-allowance-or-to-first-revoke-and-then-set-a-new-one/)

- [How Does a “Stop Limit” Order Combine a TIF Concept with Price Control?](https://learn.greeks.live/path/how-does-a-stop-limit-order-combine-a-tif-concept-with-price-control/)

- [How Does a “Stop-Limit Order” Combine the Features of a Stop Order and a Limit Order?](https://learn.greeks.live/path/how-does-a-stop-limit-order-combine-the-features-of-a-stop-order-and-a-limit-order/)

- [Should the Limit Price Be Set above or below the Stop Price for a Sell Order?](https://learn.greeks.live/path/should-the-limit-price-be-set-above-or-below-the-stop-price-for-a-sell-order/)

## Glossar

### [Trailing Stop](https://learn.greeks.live/area/trailing-stop/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Order ⎊ A trailing stop is a dynamic risk management tool that automatically adjusts a stop-loss order as the asset price moves favorably.

### [Stop Price](https://learn.greeks.live/area/stop-price/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Trigger ⎊ A stop price, within cryptocurrency derivatives and options trading, functions as a conditional order execution point, initiating a market or limit order when the specified price level is reached.

## Discover More

### [Define the 'Limit Price' Component of a Stop-Limit Order](https://learn.greeks.live/path/define-the-limit-price-component-of-a-stop-limit-order/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Define the 'Limit Price' Component of a Stop-Limit Order](https://learn.greeks.live/wp-content/uploads/2025/10/Optical-Assembly-Simulating-Volatility-Surface-Dynamics-in-Decentralized-Finance-Mechanisms.webp)

The limit price is the minimum acceptable price for a sell order (or maximum for a buy order) once the stop price is activated.

### [Can a Trader Partially Close a Position Instead of Adding Margin to Meet the Call?](https://learn.greeks.live/path/can-a-trader-partially-close-a-position-instead-of-adding-margin-to-meet-the-call/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Trader Partially Close a Position Instead of Adding Margin to Meet the Call?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-Mechanisms-Modeling-Volatility-Surface-Calibration-in-Decentralized-Finance-Instruments.webp)

Yes, closing a portion reduces the notional value, lowering the required maintenance margin, which can resolve the margin call.

### [What Is "Divergence Loss" and How Is It Related to Impermanent Loss?](https://learn.greeks.live/path/what-is-divergence-loss-and-how-is-it-related-to-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is "Divergence Loss" and How Is It Related to Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Temporal-Vector-Decomposition-Across-Multi-Asset-Class-Strike-Price-Stratification.webp)

Divergence loss is another name for impermanent loss, highlighting the loss is due to asset prices diverging from the deposit ratio.

### [How Is Value at Risk (VaR) Used in Setting Position Limits?](https://learn.greeks.live/path/how-is-value-at-risk-var-used-in-setting-position-limits/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is Value at Risk (VaR) Used in Setting Position Limits?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Stacking-of-Synthetic-Collars-Demonstrating-Delta-Hedging-Portfolio-Construction.webp)

VaR estimates maximum expected loss; position limits are set so that the portfolio's total VaR does not exceed the maximum risk capital.

### [How Does Order Book Liquidity Influence the Choice between Stop-Loss and Stop-Limit?](https://learn.greeks.live/path/how-does-order-book-liquidity-influence-the-choice-between-stop-loss-and-stop-limit/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Order Book Liquidity Influence the Choice between Stop-Loss and Stop-Limit?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Bifurcation-of-Volatility-Skew-Intersecting-Spherical-Asset-Allocation-Vectors.webp)

High liquidity favors stop-loss for guaranteed execution; low liquidity favors stop-limit to control slippage.

### [Can a Liquidity Provider Experience a Net Loss Even with Trading Fees Earned, Due to Impermanent Loss?](https://learn.greeks.live/path/can-a-liquidity-provider-experience-a-net-loss-even-with-trading-fees-earned-due-to-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Liquidity Provider Experience a Net Loss Even with Trading Fees Earned, Due to Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Asset-Custody-Mechanism-Revealing-Internalized-Derivative-Settlement-Infrastructure.webp)

Yes, if the dollar value of the impermanent loss from price divergence exceeds the accumulated trading fee revenue.

### [Can an Arbitrageur's Trade Itself Cause Impermanent Loss for Liquidity Providers?](https://learn.greeks.live/path/can-an-arbitrageurs-trade-itself-cause-impermanent-loss-for-liquidity-providers/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can an Arbitrageur's Trade Itself Cause Impermanent Loss for Liquidity Providers?](https://learn.greeks.live/wp-content/uploads/2025/10/Liquidity-Pool-Dynamics-Visualization-Contrasting-Dark-Pool-Aggregation-with-Decentralized-Exchange-Spreads.webp)

Yes, arbitrage trades force the pool to rebalance its reserves, which is the mechanism that realizes the impermanent loss.

### [What Market Conditions Might Cause a Cryptocurrency to Enter Backwardation?](https://learn.greeks.live/path/what-market-conditions-might-cause-a-cryptocurrency-to-enter-backwardation/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Market Conditions Might Cause a Cryptocurrency to Enter Backwardation?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Token-Structure-Illustrating-Strike-Price-Vectors.webp)

High immediate demand or widespread negative sentiment can cause futures prices to drop below the current spot price.

### [How Can a Protective Put Option Be Used to Hedge against This Maximum Loss?](https://learn.greeks.live/path/how-can-a-protective-put-option-be-used-to-hedge-against-this-maximum-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can a Protective Put Option Be Used to Hedge against This Maximum Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Illuminated-Glass-Orb-Mechanism-Indicating-Stochastic-Volatility-Surface-Contango-Futures-Hedging.webp)

Buying a put option establishes a floor for the asset's price, creating a "collar" strategy to hedge against a price drop.

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**Original URL:** https://learn.greeks.live/learn/can-a-trailing-stop-loss-be-used-to-enter-a-short-position/
