What is a "trailing stop"?

A trailing stop is a type of stop-loss order attached to a trade that automatically adjusts as the price moves. It is designed to lock in profits or limit losses when the trade moves favourably by a specified number of pips set by the trader.

Trailing stops only adjust in the direction of the favourable move, whereby once they shift to secure a profit or reduce a loss, they do not move back in the opposite direction.