Trailing stop
A trailing stop is a protective stop that moves in the direction of a profitable position, keeping a set distance behind the best price reached, and never moves back. It locks in part of an open gain as the market advances and exits when price retraces by the trailing distance.
Senzoukria · Glossary · Updated September 2026
At a glance
- Rule
- Long: stop = max(previous stop, best price − distance)
- Common distances
- Fixed ticks, k × ATR, swing lows, chandelier
- Only moves
- In the trade's favor (ratchet)
- Not to confuse with
- Trailing drawdown, a prop firm account rule
How it moves
A long position entered at 100 with a 3-point trailing stop starts with a stop at 97. When the market reaches 106, the stop moves to 103; at 108, it moves to 105. If price then falls, the stop stays at 105, and the position exits there with +5 points. A short position mirrors the rule. The stop is a ratchet: it follows favorable moves and ignores adverse ones.
Where the stop is held matters. A platform-side trailing stop is managed by the software and depends on it staying connected; a broker or exchange-side stop is re-sent as the market moves. Either way, the stop is an order that can slip when triggered.
Ways to set the distance
| Method | Distance | Behavior |
|---|---|---|
| Fixed | A number of ticks or points | Simple; too tight in volatile markets, too loose in quiet ones |
| ATR | k × average true range | Adapts to volatility, lags regime changes |
| Chandelier | Highest high of N bars − k × ATR | Anchored to the extreme, not to the close |
| Structure | Below the last swing low or a traded level | Follows the chart; steps rather than glides |
In Senzoukria
The order ticket sends market, limit, stop and stop-limit orders; there is no trailing stop order type. A stop can be moved to the entry with the BE button of the broker account panel, available once the market has moved past the entry in the position's favor, and the simulated account has the same break-even move. For trailing references, the indicator catalogue offers the Chandelier Exit, the Volatility Stop, which only ratchets in the trend's direction until it flips, and ATR Stop lines; they are graphical studies that send no order and do not know the position you hold. In the automatic backtest, stops are fixed at entry; a trailing exit has to be written as a close decision taken on a closed bar, which the engine fills at the next bar's open.
Common mistakes
- Trailing so tightly that normal pullbacks stop out every trend.
- Loosening a trailing stop after it has moved, which removes the ratchet.
- Backtesting a trail on closing prices and trading it on intrabar prices, or the reverse.
- Confusing a trailing stop on a position with the trailing drawdown of a prop firm account.
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Frequently asked questions
- Is a trailing stop better than a fixed target?
- They suit different outcome distributions. A trail keeps large trends and gives back part of every gain; a fixed target caps winners but banks them. Which one has the better expectancy depends on how often the market extends beyond the target, which MFE statistics can show.
- Should a trailing stop use the close or the high?
- Anchoring to the highest high, as the chandelier does, keeps the stop from falling back when a close retreats within a trend. Anchoring to the close reacts to every bar. The choice should match how the backtest modeled it.