You're correct. If you open a trade with a 50pip trailing stop then your stop is at 50pips from your entry price should your trade never enter profit.
Lets use the following example:
Trailing Stop = 50 pips
Profit/Loss of Live trade:
+10pips >> Stop Loss is now at -40pips
+20pips >> Stop Loss is now at -30pips
+30pips >> Stop Loss is now at -20pips
+40pips >> Stop Loss is now at -10pips
+50pips >> Stop Loss is now at 0pips (worse case you are at 0 risk now, hence breakeven)
+60pips >> Stop Loss is now at +10pips (worse case you profit by 10pips)
Take spread into account and adjust as applicable.
Some trailing stops do have an option where they only become active once you are in profit which is equal to or greater than the trailing stop loss chosen. So in the above example your 50pip trailing stop would kick in at +50pips profit (if achieved). Prior to this point a fixed Stop is chosen as a worse case.