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What is a trailing stop and how does it work?

What is a trailing stop and how does it work?

A trailing stop is a type of stop-loss that automatically moves with the market price when the trade is in profit.

Instead of staying fixed, the stop-loss follows the price at a set distance. If the market continues in your favor, the stop moves with it. If the market reverses, the trade is closed once the stop level is hit.

Trailing stops are most commonly used to protect profitable positions while allowing a trade to keep running.

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