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Home » Forex Glossary » Trailing Stops

Trailing Stops

A special stop loss order where as the market moves in the favor of the open position, the stop moves up to lock in profits.

Example Trade

You buy EUR/USD at 1.5492(1) and place a 20-pip stop at 1.5472(1). You then check the “Trailing Stop” box to activate the trailing stop.

The EUR/USD then rises by 30.2 pips to 1.5522(3) with every single 0.1 of a pip, your stop automatically moves up to 1.5502(3), locking in your profits. The stop will continue to rise if the EUR/USD rises. If the EUR/USD falls, the stop will remain at 1.5502(3). If the EUR/USD falls to 1.5502(3), your stop will execute, and close your trade.