A trailing stop is an order type that automatically adjusts the stop-loss level when the price moves in a favorable direction. This allows traders to secure profits as the market moves while minimizing losses if the price reverses. If the market moves unfavorably, the trade will be automatically closed at the set stop-loss level.
Example: How a Trailing Stop Works in a Buy Position
Set the stop-loss 100 pips below the entry price.
As the price increases, the stop-loss moves up, maintaining a 100-pip distance.
If the price drops, the stop-loss remains unchanged and triggers at the set level.
For detailed instructions on setting up a trailing stop and how it functions, please refer to the MetaTrader 4/5 User Guide.