What is a Trailing Stop Loss

Fondex cTrader is an advanced trading platform packed with a ton of useful features. Many of the cool features of cTrader are related to protecting your trades, thus increasing your profitability and limiting your losses. One of these advanced features is the trailing stop loss.

A trailing stop loss is a type of order in forex and stock trading, where the stop loss price is set at a certain distance, usually in pips, above or below the market price, and the stop loss order trails the market price as it moves in your favor. The aim is to lock in profit when your positions make gains while limiting potential losses.

The trailing stop loss is only triggered after your position has moved in your favor. This way, the trailing stop loss will remain at a fixed distance as long as the price moves in favor of the trader. Trailing stops never move downwards. Therefore, when the price starts moving against the trader the trailing stop will remain fixed until it is met and the trade is closed. If the price changes direction and moves in favor of the trader again, then the trailing will resume after the distance has become bigger than the initial stop loss distance.

Below we can see an example of how a trailing stop loss will work

Trade: Buy EURUSD at 1.35000

Stop Loss:  10 pips i.e. 1.34090.

When the EUR/USD rate moves to 1.35310, the stop loss will move to 1.35300.

If the rate starts moving in the opposite direction and meets the stop loss, the trade will close with a profit of 300 pips. 

How to Use a Trailing Stop Loss in Fondex cTrader

Fondex cTrader allows users to set a trailing stop loss to protect their position. The training stop loss is managed by the server so the trader does not need to worry about the trailing process. You only need to set the stop loss at a specific distance, mark it as a trailing stop loss and the server will do the job for you.

Below we demonstrate three ways to use a trailing stop loss in Fondex cTrader

Placing an Order

You can protect an order with a trailing stop loss as soon as the order is placed and the position is opened. This can be configured in the Create Order form

Here you can configure your position’s stop loss and set it to be a trailing stop loss. This way, as soon as your position is opened and the market price starts moving in your favor, the stop loss will trail with it at the specified distance.

Modifying an Order

There are many cases where you want to postpone the trailing of your stop loss for a later point in time, usually until a condition is met or your position has made a satisfactory profit and the price trend has got a definite direction. 

To enable a trailing stop loss on an existing position, you need to follow the steps below

First press the Modify Position button in your Positions grid or on the chart

The Modify Position form will pop up. 

Here just enable the Trailing Stop and click Protect. From now and on, your position will be protected by a trailing stop loss

Use a cBot

Another way to use a trailing stop loss is by using a cBot. As explained above, several times you want to enable a trailing stop loss only after certain conditions have been met. Now instead of you sitting in front of your screen and waiting for the conditions to be fulfilled, you can code a cBot that will automatically check the predefined conditions and set the trailing stop loss at the right time and distance.

A position’s stop loss can be set to trial by using the Position.ModifyTrailingStop method. You can find more information on how to use this method in a cBot here. 

Concluding, trailing stop losses are an excellent way to lock in your profits and protect your trades while the market is moving towards your direction. Trailing stop losses are a built-in feature of Fondex cTrader and allow you to enable them manually or automatically and then let the cTrader Server do the job for you by accumulating profit as the price moves in your favor.

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