Trailing stop.

A position with a stop-loss order placed may not always close at a loss when the trend reverses. If desired, you can preserve your profit by moving the stop-loss order to the breakeven zone. This isn't necessary; it can only be done manually; a management script called a trailing stop has been developed specifically for this purpose.

Trailing stop is one of the functions of the trader's terminal, which, when activated, allows a previously set stop-loss order to follow the price movement of a currency pair.

Movement occurs only in the direction of the open position, that is, if a trend reversal occurs or the Forex market rolls back against the open position, the trailing stop is triggered and the order is closed in accordance with the set parameters.

An example of setting a trailing stop will help you more clearly appreciate the benefits of using this script.

After analyzing Forex volatility , you set a stop-loss of 40 pips. After confirming that the position is trending positively, you move on to setting a trailing stop. You can set it slightly lower, for example, 30 pips. As a result, as soon as the profit on the open position reaches 30 pips, the stop order will move to the opening price.
Let's assume the price moves another 70 pips, and now our profit is 100 pips. After this, the price sharply moves against the open position, triggering the trailing stop. However, the position closes with a profit of 70 pips. Compare this situation with a standard stop.

Peculiarities of setting trailing stop.

But things aren't so simple with this script. Most trading terminals don't allow you to set its parameter below 15 pips, which rules out its use when trading on short-term timeframes. However, if you trade with a five-digit quote , instead of the standard 15 pips, you'll only have 1.5, since a pip value in a five-digit quote is exactly 10 times smaller than in a four-digit one. At least, this is what I noticed in my trading terminal.

Trailing stop also won't work if you turn off the trading terminal; this script only works when the terminal is running. However, there's a solution here: if desired, you can install the terminal on a VPS (virtual server), allowing it to run 24/7, independent of your computer.

Trailing stop is especially popular when using pending orders , when you're unable to monitor the trade and move the take profit in a timely manner to increase profitability.

You can learn how to set and modify this order in the article " How to Set a Trailing Stop ."