A trailing stop is a dynamic stop loss feature. It is triggered when the market price moves in a favorable direction to the points you have set. If the market moves in an unfavorable direction, the trailing stop is not triggered.
Once the trailing stop is triggered, the stop loss price for your buy/sell order will increase/decrease with the market price. If the market moves in an unfavorable direction, the stop loss price remains unchanged to protect the profits or reduce loss of your order.
Example:
Gold market price (2332.00/2332.30).
You open a gold buy order at the market price and set a trailing stop of 50 points. The trailing stop's stop loss price is 50 points away from the current market closing price (bid price). When the market bid price reaches or exceeds 2332.50, the trailing stop is triggered, and the stop loss price for your order becomes 2332.00.
If the current bid price continues to rise to 2335.00, the new stop loss price for your order will be 2334.50 (2335.00 - 0.50).
If the market bid price drops, the stop loss price for your order remains unchanged at 2334.50.
When the gold price later falls and then rises again to the bid price of 2334.50, your buy order will be closed at the stop loss price of 2334.50.
Please not that the points displayed for the trailing stop refer to the last decimal.
