A trailing stop is an automated mechanism that allows the stop loss (SL) to trail behind the current price of an order by a set number of points. It is one of the best tools for risk management when an order’s price is volatile or when active monitoring is not possible since it can automatically close an order and is only available on MT4 and MT5 desktop terminals.
Setting a trailing stop
To activate a trailing stop, the order must be profitable by a set number of points, only after this condition is met will this feature be available.
- On the MT4 or MT5, right-click on the open order in the Trade tab.
- Select Trailing Stop.
- Select the number of points you want the SL to trail your price. You may choose from the options or click Custom to enter your preferred value.
Managing a trailing stop
- Right-click on the open order in the Trade tab.
- Select Trailing Stop.
- Select the number of points you want to change from the options. You can also select Custom to set up your preferred value.
Removing a trailing stop
- Right-click on the open order in the Trade tab.
- Select Trailing Stop.
- Select None. If you select Delete All, it will delete all the trailing stops set in all the open and pending orders.
Trailing stop conditions
+- The trailing stop cannot be set to less than the stop level.
- As shown in contract specifications, the minimum trailing stop amount that can be set will depend on the stop level pips for each particular instrument.
- Due to limitations on the trading terminal, a trailing stop can never be set at less than 15 points in MT4.
- Only one trailing stop can be set for each position. Trailing stops can be set for pending orders too. If you have already set up a pending order, you can add a trailing stop.
- The trailing stop will start working only after the order has started moving in a profitable direction by the number of points the trailing stop is set at.
- Each time a trailing stop modifies the SL, it will be recorded in the journal tab.
- A trailing stop can be set up irrespective of whether or not an SL was set initially.
- The trailing stop will stop working once the trading terminal is closed or your device is shut down. To avoid this, you can use our Exness VPS.
Example of a trailing stop
+A trader opens a Buy order and sets their take profit (TP) and stop loss (SL) 10 points below the current price. Their order then makes a profit, but the trader needs to move away from the trading terminal for a while.
The worst-case scenario is that the price starts falling before it hits the TP level and closes at the set SL level. The trader then uses a trailing stop to ensure the order closes while it is still profitable. This means the SL always remains 10 points behind the current price instead of staying in its original position.