Trailing Stop — what it is and how to use it in trading
Definition
A trailing stop is a dynamic stop-loss that automatically follows price in the trade's favor but never moves back the other way — unlike a fixed stop-loss set once at entry.
How it works in the builder
The builder lets you set the trailing distance as a percent or as an ATR multiple, and optionally an activation threshold in units of R (the trade's risk) — until it's reached only the base stop-loss is active; a base stop-loss is required, with the trailing stop layered on top of it.
Typical use
Used in trend-following strategies instead of a fixed take-profit, to let profit grow with the market move rather than locking it in at a preset level — price itself decides when the trade closes, once it pulls back from its extreme by the trailing distance.
Common pitfalls
A trailing distance that's too tight gets a trade stopped out by ordinary market noise before the move plays out; one that's too wide gives back a large share of already-accumulated profit if the market reverses.
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.