Trailing Stop

trailing stop loss a trailing stop loss is a type of stop loss order that moves with the market price it is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in a favorable direction the trade closes as soon as the market price changes direction by a specified amount of pips example you set a trailing stop order at 20 pips on a eur/usd position that you bought at 1 1200 if the price rises to 1 1250, the stop loss would move to 1 1230 (20 pips behind the current price) if the price then falls back to 1 1230, the position would be closed out for a profit of 30 pips trailing stop loss svg pros of using breakeven and trailing stop loss together minimize losses once the market price moves favorably to reach your breakeven point, you're no longer at risk of a loss from that trade if the market reverses protect profits a trailing stop loss helps secure the profits you've already made if the market continues to move favorably, the trailing stop moves with the market, increasing your potential profit cons of using breakeven and trailing stop loss together early exit markets don't move in straight lines temporary reversals might trigger your stop loss prematurely, causing you to exit before your profit target is reached missed opportunities once a stop loss is hit, it takes you out of the market if the market then moves in the original direction of your trade, you'll miss out on those gains breakeven doesn't account for transaction costs breakeven points do not take into consideration transaction costs like spreads or commissions therefore, even if you set your stop loss at the breakeven point, you could still end up at a small loss once these costs are factored in