Trailing Stops, what happens when the trade doesn't work out straight away

I’m a bit confused with these trailing stops. I get that they adjust the stop with the price but everyone gives the example of the trade going positive from entry. What I can’t find an answer for is what happens to the stop if things don’t work out straight away, for example, you enter a long trade but just after you enter, price drops, you have quite a large stop/loss of 100 pips and a trailing stop of 50. Price has fallen 75 pips from entry. Shortly after price increases and you’re back to just below your entry. Now, has the trailing stop disregarded your stop/loss and placed a stop at -50 pips below current price or does price need to go in the direction of the trade by 50 pips to set a trailing stop?

Generally you can’t have two stop-losses (unless one covers only part of the position). So in your scenario when you open the trade you can either set a SL at Entry-100 or a TSL at Entry-50.

If you set a TSL at -100, and then price falls, nothing happens. If price rises to Entry+1, this causes the TSL to start trailing and the TSL moves up 1 pip to Entry-99. If price moves up to Entry +15, the TSL moves up to Entry-85. And so on and so on.

A Stop Loss is used to limit your loss, hence the name. A Trailing Stop Loss, however, is used to lock in your profits as your trade becomes positive. Think of it as a “Stop Profit Loss”. A TSL (if automated) can only move in the direction of the trade. If you’re going long it will trail up and if you’re going short it will trail down by whatever measure you have set. It can trail by pips, swing lows, percentage of movement, etc.

Ahh, I understand now. Thanks for clearing that up for me. I read the example I used in my post in one of the forums on here and it confused me a bit.