Trailing stop
A stop-loss that moves up as the price rises, but never moves back down.
In plain English
You set the stop a certain distance below the price, for example 3 times the ATR. If the price rises, the stop rises with it. If the price falls, the stop stays put, and when the price hits it, you are out.
Uncle Gary explains
A trailing stop is Uncle Gary walking his dog on a retractable lead. As Gary strolls forward, the lead lets out and follows. The moment the dog bolts back toward the neighbour's cat, the lead locks.
Why it matters for your money
It is meant to let winners run and cut losers short. In our test, a good exit rule did not rescue a useless entry signal.
Where we tested it
- Does the Golden Cross Work? We Tested 72 Strategies
- Does Buying the Dip Work? We Checked Which Dips
- Does a Stop-Loss Protect Your Money? We Tested Tight and Wide Stops
Related terms
All glossary terms. Educational content, not financial advice.