Trailing Stop Order

A trailing stop order is the execution mechanism that implements a trailing stop loss — it is the actual order type placed with a broker that triggers an automatic sell (for a long position) or buy (for a short position) when the price reverses by a specified trailing distance from its most favourable point. The order trails the price upward in a rising market but stays fixed once the price begins to fall, executing when the defined trailing distance is breached. Trailing stop orders eliminate the need to manually adjust stop-loss levels as a trade moves in favour, making them a valuable tool for traders who want to ride trends without constant monitoring — particularly useful for swing traders and position traders managing open overnight exposure.