> For the complete documentation index, see [llms.txt](https://basedapp.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://basedapp.gitbook.io/docs/trading/trailing-stop-loss.md).

# 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.

<figure><img src="/files/J7Ms2Ybo2m6pNr6qpKpI" alt="" width="375"><figcaption></figcaption></figure>

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## 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 %}

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## 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.

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## 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.

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## 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

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## 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 %}