Trailing Stop Loss
A trailing stop loss is a dynamic stop-loss order that moves with the market price, allowing you to lock in profits while still protecting against downside risk. Unlike a fixed stop loss, it automatically adjusts as the price moves in your favor — so you never have to manually drag your stop.
How Trailing Stop Loss Works
Choose a trailing type
Select Percentage or Fixed Amount. Percentage trails by a % of the current price. Fixed Amount trails by a dollar value.
Set the trailing distance
Define how far the stop trails behind the market price. For example, 5% or $500.
Optionally set an activation price
If set, trailing only begins once the market reaches this price. Without it, trailing starts immediately based on the current market price.
Execution
As the price moves in your favor, the stop price follows. If the price reverses by your trailing distance, the position is automatically closed.
Example (Long Position)
You buy ETH at $3,000
You set a $200 trailing stop loss
Price rises to $3,400 — the stop trails up to $3,200
Price drops from $3,400 to $3,200 — the position is closed, locking in $200 profit
If the price had continued to $4,000, the stop would have trailed to $3,800. The stop only moves up — never down.
Percentage vs Fixed Amount
Percentage — Trailing distance scales with the asset price. A 5% trail on a $60,000 asset is $3,000; on a $100 asset, it's $5. Better for volatile or high-priced assets.
Fixed Amount — Trailing distance stays constant regardless of price. A $500 trail is always $500. Better when you want a specific dollar risk.
When to Use It
Protect profits in trending markets without manually adjusting stop levels
Let winners run while capping downside on reversals
Manage risk on volatile assets like crypto where prices move fast
Trailing Stop Loss vs Fixed Stop Loss
A fixed stop loss stays at the price you set — it never moves.
A trailing stop loss moves with the market, only closing if the price reverses by the trailing distance.
Use a fixed stop loss when you have a specific invalidation level. Use a trailing stop when you want to ride a trend.
For fixed stop loss orders, see Take Profit / Stop Loss.
Trailing stop loss orders use the mark price as the trigger. In fast-moving markets, the actual fill price may differ from the trigger due to slippage.
Last updated