Trailing Stops and Pending Orders

How a trailing stop works

You set a distance, say 30 pips. When the price moves 30 pips in your favour, the stop moves to breakeven; every further pip of progress drags the stop along, and a pullback of 30 pips closes the trade. The distance decides everything: too tight and ordinary noise takes you out of a good trade; too wide and you give back most of the move. Many traders set it around one to two times the average true range of their timeframe.

Where it lives

On MetaTrader the trailing stop runs in the desktop terminal, which means it only moves while the platform is open and connected; close the laptop and the stop stays where it was. cTrader and most proprietary platforms run trailing stops on the server, so they work while you are away. Know which yours is before relying on one overnight.

Alternatives

• Manual trailing: moving the stop behind each new swing low or high on the chart, which follows the market's structure rather than a fixed distance.
• Breakeven stop: moving the stop to the entry once the trade has moved a set distance, then leaving it.
• Time stops: closing a trade that has not moved after a set period.
• Scaling out: closing part at a target and trailing the rest.

Pending orders as a plan

Placing a limit at a level with a stop and target attached is a complete trade decided calmly in advance; the order does the entering while you are not watching. The discipline is to set an expiry, review the order each session, and cancel it when the reason for it has passed. An order that fills for a reason you have forgotten is a coin flip with money on it.

Key takeaways

• A trailing stop follows price at a set distance and locks in profit.
• Size the distance to the timeframe's volatility.
• MetaTrader trails on your machine; most other platforms trail on the server.
• Pending orders are plans; give them expiries and review them.