Who this is for — Traders who want to let a trend run without manually picking the top, while protecting profit already earned. Complements a fixed stop loss.
A trailing stop is a dynamic stop loss: when price moves in your favor, the stop moves up keeping a fixed distance (% or amount); on a pullback, the stop does not move down (long) and closes the position when triggered.
In plain terms — Long at 100, trailing −10: stop starts at 90. Price hits 130 → stop at 120. Price drops to 115 → you exit at 120 with profit locked in.
Mechanics (long)
| Phase | What happens |
|---|---|
| Entry | Initial stop at distance D from price |
| New high | Stop rises, distance D unchanged |
| Pullback | Stop stays at the highest level reached |
| Trigger | Price hits stop → close (often in profit) |
Common platform parameters: trail distance and activation price (starts only after +X% profit).
Pros and cons
| Pro | Con |
|---|---|
| Captures long trends | Tight distance → early exit (whipsaw) |
| Automates exit | |
| Reduces greed mid-run | Does not replace your initial target plan |
Typical mistake — Trailing −0.5% on a volatile asset in chop: a string of small losses. Widen the distance or use only in a clear trend.
Example — Long BTC, entry 60k, trailing $1,000. High 65k → stop at 64k. Pullback to 63.5k: position still open. Close below 64k: +$4k locked without guessing the top.
Summary sheet
- Rule: rises with price, never moves back (long).
- Ideal context: strong trend, multi-candle hold.
- Avoid: choppy market with no direction.
Bronze path — Advanced execution module. Index: Bronze path.