Trailing Stop is an algorithm to manage Stop Loss orders. Once a trailing stop has been placed (for example, trailing stop’s value is 15 pips) the following occurs:
- No Stop Loss order will be placed until the open position is in a profit of at least 15 pips. MetaTrader 4 then sends an instruction to place the Stop Loss order 15 pips higher or lower than the current price.
- Subsequently, each time the difference between the current price and the order level exceeds 15 pips, MetaTrader 4 sends the instruction to modify the Stop Loss order to a level 15 pips higher or lower than the current price. As a result, the Stop Loss order becomes closer to the current price.
Important:
It is very important to note that no Stop Loss order will be placed until the market moves in your favor as mentioned above. Therefore until this has happened, to limit losses, a separate Stop Loss would need to be placed manually.
In order to place a trailing stop, highlight the open position in the “Trade” tab of the “Terminal” window and right click to open the context menu.
