Risk Management
Trailing Stop
A stop loss that moves with price to lock in profits.
Full Definition
A trailing stop is a dynamic stop loss order that automatically moves in your favor as price moves profitably, while staying fixed if price moves against you. It allows you to capture more profit in trending markets while still protecting gains. Trailing stops can be set as a fixed pip distance or as a percentage.
Example
You buy EUR/USD at 1.1000 with a 50-pip trailing stop. As price rises to 1.1100, your stop moves to 1.1050 (100 pips of gain, stop trails 50 pips behind). If price reverses, you exit at 1.1050 with 50 pips profit secured.
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