Trailing Stop

The Trailing Stop is a popular tool used by traders, placed on an open position at a specified distance (measured in points) from the current price. Its main purpose is to lock in any potential profits.

Mechanism and Function

  • Profit Tracking: If the market keeps moving in the profitable direction, the trailing stop moves with it, always maintaining the stop loss at the preselected point distance from the current price.
  • Stop Fixation: If the market stops moving in the profitable direction, the trailing stop keeps the stop loss level fixed.
  • Position Closure: If the market reverses against the profitable direction, and the price reaches the preset stop loss level, the position is closed automatically.

Execution Details

  • Execution Location: Trailing stops are executed on the platform (directly from the chart or the terminal window), and not on the server (similar to standard Stop Loss and Take Profit orders).
  • Activation: A trailing stop is activated only when the profit of the position reaches or exceeds the designated trailing stop level.

Disabling the Trailing Stop

There are two methods for disabling the trailing stop:

  1. To disable for a single order: Set the None parameter in the control menu of that specific order.
  2. To disable for all positions: Set the Delete all parameter from the control menu of any open order.

Detailed Summary

The Trailing Stop is a trading tool used on open positions, set at a specific point distance from the current price, primarily designed to lock in profits. It dynamically adjusts the stop loss level as the market moves favorably, but fixes the stop loss if the market stalls. The position is automatically closed if the market reverses and hits the adjusted stop loss. Crucially, trailing stops are executed on the trading platform, not the server, and only activate once the position's profit meets or exceeds the designated trailing stop level. They can be disabled either for individual orders or across all open positions.

Key Takeaways

  • A Trailing Stop is a tool used by traders on open positions to lock in potential profits.
  • It is set at a specified distance (in points) from the current market price.
  • Profit Tracking: If the market moves favorably, the trailing stop adjusts the stop loss level, maintaining the preset point distance.
  • Stop Fixation: If the market stalls, the stop loss level remains fixed.
  • The position is closed automatically if the price reverses and reaches the preset stop loss level.
  • Trailing stops are executed on the trading platform (from the chart or terminal), not on the server.
  • Activation occurs only when the position's profit meets or exceeds the designated trailing stop level.
  • To disable for a single order, select the None parameter.
  • To disable for all positions, select the Delete all parameter.