What is Trailing stop?

What does Trailing stop mean in practice?

A normal stop stays where it was placed. A trailing stop ratchets: as price rises on a long position, the stop rises with it at a fixed distance or percentage, and when price pulls back by that distance the position is closed. The gain already made is partly protected without choosing an exit in advance.

The distance is the whole decision. Tight trails exit on routine pullbacks and give up trends early. Loose trails stay in but give back more of the gain. Neither is correct in general, and the right setting depends on the strategy's typical trade.

A worked example

Illustrative only: long from 100 with a trail of 3. Price reaches 112, so the stop sits at 109. A pullback to 109 closes the trade for a 9 gain, rather than waiting for a fixed target.

How to read or test it

Test several trail distances on the same history and compare not just profit but how much of each winning trade's peak gain was kept. Express the distance in terms of the market's own movement, such as a multiple of average range, so it adapts to changing volatility. Check that the trail does not exit ordinary pullbacks too early, by looking at what the price did after the trailed exits.

How AKQX handles Trailing stop

AKQX supports trailing stop loss on positions, and it is included in backtests and paper trading so its effect appears in the scored result.

See Risk management tools for the feature page.

A common mistake

Trailing so tightly that a normal pullback ends every winning trade early.

Related terms