Trailing Stop

Trailing stop is an order which shifts a Stop Loss depending on the price movement. 

To make this explanation clearer, let us take an example:

A trader opens a buy deal and sets a Stop Loss below the current price. At the same time, he also places a Trailing Stop below the current price but above the suggested Stop Loss. If the price goes upwards, the Trailing Stop tails after it automatically sticking to the set distance. In case the price goes down, the Trailing Stop remains on the spot. This way, the trader has an opportunity to derive a larger profit in case of an uptrend, as his deal won’t be closed prematurely by the SL order.  

Furthermore, Trailing Stop helps traders to limit losses. For instance, a trader opens a buy deal at the price of 1.3400 and puts the Trailing Stop value 50 pips below it, i.e. at 1.3350. In case the price starts moving upwards and breaks above 1.3400, the Trailing Stop follows it automatically observing the set gap of 50 pips from the current price. That means, if the price touches 1.3700, the Trailing Stop shifts the SL order to 1.3650. If the price turns down, the SL does not change its position. 

As to sell positions, the Trailing Stop works in a different way. Traders place it above the current price. As the price starts falling, the Trailing Stop shifts the SL order according to the set proportion. If the price rises, the Trailing Stop does not move. 

The Trailing Stop sets a Stop Loss order automatically at the value the trader needs. It is mainly used by those who have no possibility to track price moves permanently. The Trailing Stop has also proved to be useful at intraday trade, when quick reaction to any price change is required. Importantly, the Trailing Stop is active only when the trading platform is connected to the server. Otherwise, it does not perform its function, i.e. the Stop Loss order remains on the spot. However, it is not an issue for those who use the VPS service as it allows you to stay connected even when you are having some Internet connection problems.