A trailing stop is a moving stop loss set in a trade that follows the relevant market price movement. It could be said to be an advanced Stop Loss that modifies the stop level based on the open position's trend.

When a position encounters a positive market, the trailing stop adjusts and optimizes the stop established by moving it up or down. The Trailing Stop is designed to automatically optimize possible profit while also limiting losses to a specific level.

How trailing stop works

The trailing stop of an active trade is set like it’s a normal stop loss, that is, below the entry price for buy trades and above the entry price for sell trades.

The trailing stop of a buy trade moves up as the price increases and moves down as the price decreases in a sell trade.

How to set a Trailing Stop in MT5

To set a trailing stop in MT5.

1. Navigate to your toolbox and hover over the trade you would like to set a trailing stop loss.
2. Right-click on the trade to open the options menu.
3. From the menu, “click on trailing stop”
4. A new menu where you can either pick from the preset stop-loss points or set a custom value will pop up.
5. To set a custom value, select the custom option.
6. A new window where you can input your custom trailing stop value will then pop up.
7. Input your trailing stop level and click “ok”.

The "Trailing Stop" isn't activated when you set the "Trailing Stop" parameter.

It will only be activated if the market price advances in your favor, advancing above/below the previously specified level.

If the market moves against your position, before the trailing stop is activated, then your position will be without a trailing stop loss.