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🎯 Orders·intermediate

Trailing Stop

Also called: trailing stop loss

A stop loss that automatically moves in your favor as price moves — locks in profit while letting winners run.

A trailing stop is a dynamic stop loss that follows price as it moves in your favor but never moves backward. If you set a 30-pip trailing stop on a long EUR/USD trade, the stop sits 30 pips below the current price. As price rises, the stop rises with it. As price falls, the stop stays where it is. When price drops 30 pips from its peak, the stop triggers and you exit. Trailing stops automate the "let winners run, cut losers short" rule. They take the emotion out of exits — you don't have to watch the chart and decide when to take profit. The stop does it for you. The trade-off is choice of trail distance. Too tight and you get stopped on normal pullbacks. Too wide and you give back too much profit. The right distance depends on the pair's volatility (use ATR as a guide) and your timeframe.
Real trade example

Traders who used a 2x ATR trailing stop on Gold during the 2024 rally rode the move from $2,000 to $2,790 with only one or two stop-outs along the way — capturing nearly the full $790 move.

Related terms

Stop Loss

beginner

An order that automatically closes your trade at a predetermined loss level — your first line of survival.

ATR (Average True Range)

intermediate

An indicator that measures average price volatility over a set period — used to size stops and position sizes.

Stop Order

beginner

An order that becomes a market order once price reaches a specified trigger level — used to enter on a breakout.

Take Profit

beginner

An order that automatically closes your winning trade at a predetermined profit level — your exit plan in advance.

Parabolic SAR

intermediate

A trend-following indicator that plots dots above or below price — used to set trailing stops and identify trend direction.

Sell Limit

beginner

A pending order to sell ABOVE the current price — used to enter short on a rally to a resistance or value level.

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