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Trailing Stop

Risk order that adjusts automatically with favorable price movement, locking in gains while allowing trends to continue.

A trailing stop is a dynamic stop-loss order that moves in favor of a position as the market price moves. It locks in profits while limiting downside risk.

For example, an oil trader may place a trailing stop $2 below the highest WTI price reached since entering a long position. As the price rises, the stop follows, automatically protecting gains.

Trailing stops are used in commodities, equities, and forex to combine profit protection with flexibility. They prevent emotional trading decisions and allow positions to capture extended trends while minimizing losses.

By employing trailing stops, traders maintain disciplined risk management, optimize returns, and enhance execution efficiency in volatile and fast-moving markets.

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