Trading glossaryReviewed 16 July 2026
Definition
A trailing stop order adjusts its trigger in a favorable direction by a selected distance while not moving it back when price reverses.
In market context
The trail can be defined as a monetary amount or percentage and follows a reference price under the venue’s rules. Once triggered, it becomes the specified market or limit instruction and inherits that instruction’s slippage or non-execution risks. A tight trail can activate during ordinary volatility, while a wide trail can permit a large giveback, so the setting should fit position size and market behavior.
Risk context
A trailing distance does not guarantee the eventual fill price and can be skipped during a gap.
Source
Use the primary source for fuller regulatory or market context.