Trading Academy Lesson

Trading with City Index

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Trailing stops

2-minute read

A trailing stop is created by setting up a stop order that ‘trails’ your position by a specific number of points. This is useful for ensuring that you lock in profits if the market moves in your favour.

If your trade moves in in the direction you predicted, the trailing stop moves with the market, in the same direction as your potential profit and will only be executed when the market moves against you by the set number of points.

In the example here, a trailing stop has been set up to trail the market price 30 points below market order.

Trailing stops

As with standard stop loss orders, trailing stops are not guaranteed – therefore in periods of market volatility your order may experience gapping and may not be triggered at the specified price.

In this scenario your order will be triggered and your trade executed at the best available price our system can deliver to you – it’s important to note that this price may be worse than the level specified by you.

You do have the option to place a guaranteed stop loss order and you can find out more about how to do this in our article on risk management.

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