Trailing stop - How?

Hello all!

I really need to figure out how the trailing stop works :slight_smile: So I hope you guys can help me out.

As you can see on the screenshot below, I have 2 variables that I can set.
“Trailing distance” and “Trailing step”

But what do they mean and how do they work?
I have read something about it, that it’s some kind of a % of price, but as you can see, I don’t understand it at all :confused:

Please help and thanks in advance.


Welcome to Babypips.com Vatslav!

I can try and explain trailing stop, but I can also just Copy+Paste from Wikipedia. I’ll go for the second option.

“A trailing-stop order is an order entered with a stop parameter that creates a moving or trailing activation price, hence the name. This parameter is entered as a percentage change or actual specific amount of rise (or fall) in the security price. Similarly a trailing-stop-limit order could be entered. Few brokerage firms will accept these orders as they must continuously keep track of the stock price and adjust the stop level”

and now, an example:
you long EURUSD @ 1.3600
it rises to 1.3650
you’ve gained a nice 50 pips pot, but you got a bit greedy, oops I meant to say that after analyzing the pair over and over again, you just realized it should still go up to an unknown territory. might be 1.3680, might be 1.3740 etc.
you put on a trailing stop with 30 pips distance.
this mean, that whenever the pair makes a fall of 30 pips from it’s highest peak so far, a stop loss order would be executed.
example - price went to 1.3680, then down to 1.3670, then up again to 1.3730. now it starts falling all the way to 1.3600. you’re stopped at 1.3700 because it’s -30 pips from the highest peak (1.3730).

this, of course, works as well when going short.

about the trailing step you got in your platform - I’d recommand simply asking your broker. haven’t met this term. please share if you do.

hope this helps.

Regards.

Thank you very much Parsush :slight_smile: