Trailing Stop (Trailing Stop, Tral) is a type of stop-loss order used to limit losses or lock in profits as the price of an asset moves in a favorable direction.
A Trailing Stop allows traders to automatically adjust the stop-loss level based on the price movement. It maintains a set number of pips or points between the current price and the stop-loss order, helping traders maximize gains while limiting risk.
This tool is especially useful during strong trending markets when it’s difficult to monitor trades continuously. A Trailing Stop is tied to an open position and executed within the trader’s terminal, not on the broker’s server like a regular Stop Loss. Therefore, it only works when the trading platform is active. Each open position can have only one Trailing Stop.
FAQ
What is a Trailing Stop?
A Trailing Stop is a type of stop-loss order that adjusts automatically as the price of an asset moves in a favorable direction, helping traders lock in profits.
How does a Trailing Stop work?
A Trailing Stop sets a fixed distance from the current price. As the price moves in the trader’s favor, the stop-loss level follows, maintaining the set distance.
Can a Trailing Stop be used with any trade?
Yes, a Trailing Stop can be applied to any open position, but it only functions when the trading platform is active and must be set individually for each trade.
