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Trailing stop — definition & meaning

A stop-loss that follows price in your favour to lock in gains.

A trailing stop moves automatically as the price moves in your favour, but stays put when the price moves against you. It locks in more profit as a trade runs while still capping the downside.

For example, a trailing stop 20 pips behind price will rise with a long position but never fall. When price finally reverses by the trailing distance, the trade closes.

The information on Trding.io is for general information only and is not investment advice. Trading involves a real risk of losing money, and most retail traders lose. Never trade money you cannot afford to lose.

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