What Is A Trailing Stop Order

Discussion in 'General Trading Discussion' started by Duong, May 11, 2019.

  1. Duong

    Duong Active Member

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    Trailing Stop

    A trailing stop is a type of stop-loss order attached to a trade that moves as price fluctuates.

    Let’s say that you’ve decided to short USD/JPY at 90.80, with a trailing stop of 20 pips. This means that originally, your stop loss is at 91.00. If the price goes down and hits 90.60, your trailing stop would move down to 90.80 (or breakeven).

    Just remember though, that your stop will STAY at this new price level. It will not widen if market goes higher against you. Going back to the example, with a trailing stop of 20 pips, if USD/JPY hits 90.40, then your stop would move to 90.60 (or lock in 20 pips profit).

    Note: I use Forexchief broker and I have benefited from using these stop orders because their server is very fast in execution. No slippages in most cases.

    Your trade will remain open as long as price does not move against you by 20 pips. Once the market price hits your trailing stop price, a market order to close your position at the best available price will be sent and your position will be closed.
     
    Last edited: May 12, 2019

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