# 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
{% stepper %}
{% step %}
**Choose a trailing type**
Select **Percentage** or **Fixed Amount**. Percentage trails by a % of the current price. Fixed Amount trails by a dollar value.
{% endstep %}
{% step %}
**Set the trailing distance**
Define how far the stop trails behind the market price. For example, 5% or $500.
{% endstep %}
{% step %}
**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.
{% endstep %}
{% step %}
**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.
{% endstep %}
{% endstepper %}
***
## 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](/docs/trading/take-profit-stop-loss.md).
***
{% hint style="info" %}
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.
{% endhint %}
---
# Agent Instructions: Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.
Perform an HTTP GET request on the current page URL with the `ask` query parameter:
```
GET https://basedapp.gitbook.io/docs/trading/trailing-stop-loss.md?ask=
```
The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.
Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.