What is a Trailing Stop Loss?

A Trailing Stop Loss (TSL) is a risk management tool designed to help protect gains when you are not actively monitoring your position.

Unlike a regular Stop Loss, which remains stationary, a TSL is an instruction to close a position at a rate that adjusts dynamically as the market price moves in your favor.

In the US, TSL is currently available on crypto positions only.

When you enable the TSL on a trade, the pip distance between the Stop Loss rate and the current market rate is locked in. As the market price moves in your favor, the Trailing Stop Loss also moves in the same direction, always maintaining the same pip distance from the market price.

However, if the market price moves against you, the TSL will not move, and the position will close if the Stop Loss rate is reached.

If the Stop Loss is manually edited while the TSL is already enabled, the pip distance between the new Stop Loss and the current market rate is updated. This new pip distance will be kept going forward instead of the old one.

Below is a visual representation of how the TSL automatically adjusts as the asset's price fluctuates. The solid line represents the asset price, and the dotted line represents the Stop Loss rate with TSL enabled.

Example

In the position below, the current market rate for Litecoin is 68.45. The investor sets a Stop Loss rate of 60.00 and activates Trailing Stop Loss.

The difference between the current market rate (68.45) and the Stop Loss rate (60.00) is 8.45 (845 pips). This pip distance is now locked in. So, let's say the asset's price increases to 78.45, then the Stop Loss would automatically adjust to 70.00. However, if the price decreases the Stop Loss will not adjust.

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| *Note: Crypto trading is not available in NV, HI, Puerto Rico and the US Virgin Islands.* |