A trailing stop order can limit your losses in a position, just like a normal stop loss order. However, more than a stop loss order, the trailing stop order can adjust the stop loss price according to the market price move if the position becomes increasingly profitable.
When placing a trailing stop you need to set two parameters:
- Stop Loss, to determine a distance to the market (typically set at a price, you can also set in percentage, ticks, or currency).
- Trailing step, to specify how much should the market moves favorably to you before the stop loss price re-adjusts. If the market price never moves as much as the trailing step, your stop loss price will remain as you set and will work as a normal stop loss order.
Example of a trailing stop orderPrice unit exampleYou buy 10 shares of stock XYZ at USD 190 per share. You place a trailing stop at Stop loss price USD 180 and trailing step USD 5. Scenario 1: The market price rises to USD 195:
Scenario 2: The market price rises to USD 194:
Scenario 3: The market price declines to USD 185:
Scenario 4: The market price rises to USD 220 and declines to USD 210:
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Place a new trade that includes a trailing stop order
- Open a trade ticket by clicking the blue Trade box next to an instrument
- After filling the ticket, click Add Take profit / stop loss
- Click on Stop loss and choose Trailing stop
- Choose the type of unit used to establish a distance from the market for the Stop, e.g., Price
- Set the two parameters stop loss (price) and trailing step, determining how much the price should move to change the stop loss
- Determine the duration of your order by navigating in Duration, e.g. GTC means good till cancel.
- Click Place order
Please watch this video to learn how to place a trailing stop order.
Besides percentage and price, you can use Currency and Ticks as units for your trailing stop order:
- When using Currency, (the currency will be the currency of the instrument you are trading,) you can specify a fixed amount you can accept to lose in the trade. You know precisely what you are risking which can provide clarity.
- Ticks are the smallest possible price movements in the market. Imagine a currency pair where each tick represents a change of USD 0.0001. If the currency pair moves from 1.1234 to 1.1235, that’s one tick. Ticks allow you to place trades based on very small price fluctuations. Click here to know more about Ticks.
Add a trailing stop order to an existing position
Trailing stops can also be added to existing positions. This can be done the following way:
- Go to Positions
- Click Add under the Stop section
- Click on Stop Loss and choose Trailing Stop
- Choose the type of unit used to establish a distance from the market for the Stop, e.g., Price
- Set the two parameters stop loss (price) and trailing step, determining how much the price should move to change the stop loss
- Click Place order
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Trailing stop for short positions Trailing stop orders work for short (Sell) positions as well, but here the trailing stop is placed above the current market price. |
Live prices
Trailing stop orders rely on real-time market information. Having access to live prices ensures that your orders are executed accurately based on the most up-to-date data and minimizes the risk of placing orders based on outdated information.
Read about how to subscribe to live prices here.
*Be aware that in volatile markets the price and time of order execution might be affected. Read more in our Order execution policy