Trailing Stop
A trailing stop is a stop level that rises as price rises and never comes back down, so the R you walk away with is set by how far the trade actually ran — its best excursion minus one trail distance — instead of by the target you fixed before it started.
| Best excursion | In price | Fixed target at 2.00R | Trailing, 0.50R trail | Difference |
|---|---|---|---|---|
| 0.25R | 0.50 | −1.00R | −0.25R | +0.75R |
| 0.50R | 1.00 | −1.00R | 0.00R | +1.00R |
| 1.00R | 2.00 | −1.00R | +0.50R | +1.50R |
| 1.50R | 3.00 | −1.00R | +1.00R | +2.00R |
| 2.00R | 4.00 | +2.00R | +1.50R | −0.50R |
| 3.00R | 6.00 | +2.00R | +2.50R | +0.50R |
| 4.00R | 8.00 | +2.00R | +3.50R | +1.50R |
| 5.00R | 10.00 | +2.00R | +4.50R | +2.50R |
| 7.00R | 14.00 | +2.00R | +6.50R | +4.50R |
| 10.00R | 20.00 | +2.00R | +9.50R | +7.50R |
Trail distance in this table: 0.50R, which is 1.00 of price at 1R = 2.00 — so the 2.50R crossing point is this table's number and no other's; at a 1.00R trail the same target crosses at 3.00R.
Two things fall out of those ten rows. Under the fixed target only two answers can ever come back — −1.00R or +2.00R — so five of the rows stack on one point in the middle of the distribution and no row can land past +2.00R at all. Under the trail the answer is a straight line, best excursion minus the 0.50R given back, which is why a 10.00R run pays 9.50R. The trail is not free for that: between 2.00R and 2.50R of excursion it pays less than the target would have, and the crossing point is where the two are equal — 2.00 + 0.50 = 2.50R.
What moves, and what does not
The amount at risk is decided before the trail exists. Entry 100.00 minus a stop at 98.00 is 2.00, and that 2.00 is 1R for the whole life of the trade — no trail changes it. What the trail changes is the level the trade exits at, and therefore how many of those R you keep. That is the entire mechanism, and it is one line:
The second form of the last line is the one worth carrying, because it says the outcome in one subtraction: a trade that runs 4.00R and is trailed at 0.50R ends at 3.50R. It also says what the number is not — until the price actually comes back by the trail distance, the trade is still open and that subtraction is a level, not a result. A trailing stop that is never reached has not changed anything at all.
One path, twelve bars
Take one path and walk it. Entry 100.00, initial stop 98.00, trail 1.00, and the trail is re-set from the closing price of each bar. The first bar dips to 99.00, price then runs 1.00 a bar to 108.00 at bar ten, and turns back down.
| Bar | Close | Highest close so far | Stop for the next bar | R if it goes off there |
|---|---|---|---|---|
| 1 | 99.00 | 99.00 | 98.00 | −1.00R |
| 2 | 100.00 | 100.00 | 99.00 | −0.50R |
| 3 | 101.00 | 101.00 | 100.00 | 0.00R |
| 4 | 102.00 | 102.00 | 101.00 | +0.50R |
| 5 | 103.00 | 103.00 | 102.00 | +1.00R |
| 6 | 104.00 | 104.00 | 103.00 | +1.50R |
| 7 | 105.00 | 105.00 | 104.00 | +2.00R |
| 8 | 106.00 | 106.00 | 105.00 | +2.50R |
| 9 | 107.00 | 107.00 | 106.00 | +3.00R |
| 10 | 108.00 | 108.00 | 107.00 | +3.50R |
| 11 | 107.00 | 108.00 | 107.00 — exit | +3.50R |
| 12 | 106.00 | 108.00 | 107.00 | +3.50R |
Three rules on the same path, three different numbers. A fixed stop at 98.00 with a target at 104.00 goes out at bar six at 104.00, which is +2.00R. A fixed stop with no target, marked at the twelfth bar, is sitting on 106.00, which is +3.00R. The trailing stop goes out at bar eleven at 107.00, which is +3.50R. The distance between the three answers is the trail: 108.00 − 1.00 = 107.00, and everything below 108.00 on the way down belongs to whoever was still holding.
Ten paths, three rules
One path proves nothing, so here are ten, built by one stated rule and printed in full so any row can be checked by hand. Each path is twelve bars: the first bar closes at 99.00, the price then runs 1.00 a bar for as long as that path runs, and falls 1.00 a bar afterwards. Path k runs for k − 1 bars after the dip, so its peak is 98.00 + k.
| Path | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Peak |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| k = 1 | 99.00 | 98.00 | 97.00 | 96.00 | 95.00 | 94.00 | 93.00 | 92.00 | 91.00 | 90.00 | 89.00 | 88.00 | 99.00 |
| k = 2 | 99.00 | 100.00 | 99.00 | 98.00 | 97.00 | 96.00 | 95.00 | 94.00 | 93.00 | 92.00 | 91.00 | 90.00 | 100.00 |
| k = 3 | 99.00 | 100.00 | 101.00 | 100.00 | 99.00 | 98.00 | 97.00 | 96.00 | 95.00 | 94.00 | 93.00 | 92.00 | 101.00 |
| k = 4 | 99.00 | 100.00 | 101.00 | 102.00 | 101.00 | 100.00 | 99.00 | 98.00 | 97.00 | 96.00 | 95.00 | 94.00 | 102.00 |
| k = 5 | 99.00 | 100.00 | 101.00 | 102.00 | 103.00 | 102.00 | 101.00 | 100.00 | 99.00 | 98.00 | 97.00 | 96.00 | 103.00 |
| k = 6 | 99.00 | 100.00 | 101.00 | 102.00 | 103.00 | 104.00 | 103.00 | 102.00 | 101.00 | 100.00 | 99.00 | 98.00 | 104.00 |
| k = 7 | 99.00 | 100.00 | 101.00 | 102.00 | 103.00 | 104.00 | 105.00 | 104.00 | 103.00 | 102.00 | 101.00 | 100.00 | 105.00 |
| k = 8 | 99.00 | 100.00 | 101.00 | 102.00 | 103.00 | 104.00 | 105.00 | 106.00 | 105.00 | 104.00 | 103.00 | 102.00 | 106.00 |
| k = 9 | 99.00 | 100.00 | 101.00 | 102.00 | 103.00 | 104.00 | 105.00 | 106.00 | 107.00 | 106.00 | 105.00 | 104.00 | 107.00 |
| k = 10 | 99.00 | 100.00 | 101.00 | 102.00 | 103.00 | 104.00 | 105.00 | 106.00 | 107.00 | 108.00 | 107.00 | 106.00 | 108.00 |
Now the same three rules on all ten: A is a fixed stop at 98.00 with a target at 104.00; B is the same fixed stop with no target, marked at the twelfth bar; C is the trailing stop with a trail of 1.00.
| Path | Peak | A — fixed stop + 2.00R target | B — fixed stop, marked at bar 12 | C — trailing, 1.00 |
|---|---|---|---|---|
| k = 1 | 99.00 | −1.00R | −1.00R | −1.00R |
| k = 2 | 100.00 | −1.00R | −1.00R | −0.50R |
| k = 3 | 101.00 | −1.00R | −1.00R | 0.00R |
| k = 4 | 102.00 | −1.00R | −1.00R | +0.50R |
| k = 5 | 103.00 | −1.00R | −1.00R | +1.00R |
| k = 6 | 104.00 | +2.00R | −1.00R | +1.50R |
| k = 7 | 105.00 | +2.00R | 0.00R | +2.00R |
| k = 8 | 106.00 | +2.00R | +1.00R | +2.50R |
| k = 9 | 107.00 | +2.00R | +2.00R | +3.00R |
| k = 10 | 108.00 | +2.00R | +3.00R | +3.50R |
| Mean | — | +0.50R | 0.00R | +1.25R |
Trail distance in this table: 1.00 of price, which is 0.50R — the first table's distance quoted the other way round, not a second one, so its crossing point with the 2.00R target is still 2.50R; a 1.00R trail (2.00 of price) is the one that crosses at 3.00R.
Read what the trail did to the shape, because the mean is the least interesting part of it. Rule A can only ever return two numbers, and it returns +2.00R five times: five of the ten winners sit on exactly the same point, and nothing anywhere sits past +2.00R. Rule C returns ten different values. The five trades the target stacked at +2.00R come back spread from +1.50R to +3.50R — one of them below what the target paid, one the same, and three past the point the target could reach — and the five that gave everything back come back as two losers, one scratch and two small wins. That is the whole claim: the mass leaves the middle and redistributes, some of it downward into scratches, some of it out along the tail.
On this particular set the mean moves from +0.50R to +1.25R, and the reason is in the construction, not in the market: all ten paths rise once and then fall once, which is the shape that flatters a trail. Real paths pull back in the middle of a run, and a pullback deeper than the trail distance is a trade the trail exits and the target does not.
How much of the run you keep
Once the outcome is best excursion minus trail distance, the trail distance is the only dial left, and it is a two-sided one: a tight trail keeps more of the run and is taken out by smaller pullbacks. The four columns below come straight from that subtraction, with no paths involved.
| Trail, price | Trail, in R | Kept from a 4.00R run | Kept from a 1.00R run | Excursion needed to beat the 2.00R target |
|---|---|---|---|---|
| 1.00 | 0.50R | +3.50R | +0.50R | 2.50R |
| 2.00 | 1.00R | +3.00R | 0.00R | 3.00R |
| 3.00 | 1.50R | +2.50R | −0.50R | 3.50R |
| 4.00 | 2.00R | +2.00R | −1.00R | 4.00R |
The last column is the one to keep: it is the target plus the trail, 2.00R + the distance you give back, and it is the size of run a trail has to catch before it beats the target it replaced. Give back 0.50R and the trade has to run 2.50R; give back 2.00R and it has to run 4.00R.
Run the ten paths above at two of those distances and the same dial shows up in the outcomes: at a trail of 1.00 the ten come back with a mean of +1.25R, three of them past +2.00R and two of them negative; at a trail of 2.00 the mean is +0.80R, two are past +2.00R and three are negative. Tighter kept more of the run on these paths, and these paths contain no pullbacks — which is exactly the case the SEC's investor bulletin is warning about when it says investors should choose the trailing stop price carefully, because short-term market fluctuations in a stock's price can activate a trailing stop order.
What the order does and does not promise
Everything above is arithmetic about an exit level. The order itself is a separate thing, and every one of the pages Google showed for this word describes it — so this section is not a difference, it is the part any page on this subject has to get right.
- The trail is the trigger, not the fill. The SEC's investor bulletin puts it directly: the stop price is not the guaranteed execution price, it is the trigger that turns the order into a market order. The same bulletin notes that venues differ on what counts — some trigger on last-sale prices, others on quotations.
- The level only moves one way. Fidelity's page says the trigger price never retreats from its highest advance; Interactive Brokers says the stop price will adjust in your favour but never to cause more than the maximum loss you first defined.
- The trail can be dollars or a percentage. Interactive Brokers lets the trail be a dollar amount or a percentage of the current price; CIBC's Investor's Edge calls the amount the trigger delta and lets you specify it either way.
- A trailing stop order and a trailing stop limit order are not the same ticket. CIBC's version triggers into a limit order placed a further distance away, the limit offset; Fidelity lists four types — stop and stop limit, each in dollars or percentages — and notes that single-leg option trails must be in dollars.
- Brokers work the example the same way we do. The thinkorswim manual buys at 25.00 with an offset of 2.00, lets the price reach 35.00, holds the stop at 33.00, and exits there: peak minus the trail, which is the subtraction this page is built on.
What none of the pages we could read does is put the result in R and set it next to the fixed target it replaced. They describe the order and its mechanics; the distribution above is the part that is not on them.
Fixed stop, moving stop
These are two different jobs and this site keeps them on two pages. A fixed stop is placed before entry and priced from the account: the distance your risk budget pays for at the size you already chose, in pips and in price, with the spread and commission out first — that is the stop loss calculator, and it answers a question you ask before you are in the trade. This page starts after entry and asks a different one: given that the trade is on and running, where does the exit land, and what does that do to the R you end up banking. Nothing on this page sizes a position, and nothing on that page moves a stop.
What people call this
A trailing stop loss and a trailing stop order are the same thing named from the two ends — the loss it limits and the ticket that does it. A trailing stop limit order is the version that triggers into a limit order instead of a market order, with a second distance you choose; everything on this page is about the trigger level and holds either way.
A trailing stop percentage is the same rule with the distance quoted as a share of price rather than in money: 1% on a 100.00 entry is the 1.00 trail used above. A trailing stop calculator is the box near the top of this page — entry, initial stop, trail distance and the highest price so far, which is all the subtraction needs.
Questions traders ask
What is a trailing stop, in one line?A stop level set a fixed distance under the highest price the trade has reached, so it rises with the price and never falls back. On this page's example — entry 100.00, initial stop 98.00, trail 1.00 — a peak of 108.00 leaves the stop at 107.00, and that is +3.50R against the +2.00R a fixed 104.00 target would have paid.
How do you work out where a trailing stop is?Highest price since entry minus the trail distance, floored at the stop you started with. At a peak of 108.00 with a trail of 1.00: 108.00 - 1.00 = 107.00. In R, divide the distance from entry by 1R: (107.00 - 100.00) / 2.00 = +3.50R. The short form is best excursion minus trail distance, both in R.
Does a trailing stop change how much I am risking?No. The amount at risk is fixed at entry: 100.00 minus a stop at 98.00 is 2.00, and that is 1R for the whole trade. What moves is the level you exit at, so what changes is how much of that 1R you lose or keep — from −1.00R if the price goes straight down, to +3.50R on a 4.00R run with a 0.50R trail.
Trailing stop or fixed target — which one pays more?Whichever one the excursion favours, and the switch is one addition: target plus trail. Against a 2.00R target with a 0.50R trail, the trade has to run 2.50R before the trail pays more; below that the target does. At a 2.00R trail the same target needs a 4.00R run.
What trail distance should I use?The table above is the trade-off, not an answer, because the right distance depends on how far your trades run and how deep their pullbacks go — two numbers only your journal has. What is on this page is the cost of each choice: a 1.00 trail keeps +3.50R of a 4.00R run and needs a 2.50R run to beat a 2.00R target; a 4.00 trail keeps +2.00R of the same run and needs 4.00R. The SEC's bulletin warns that short-term fluctuations can trigger a tight trail.
Is a trailing stop guaranteed to get me out at the stop price?No. The SEC's investor bulletin states that the stop price is not the guaranteed execution price — it is the trigger that turns the order into a market order, and the fill can differ from it. The same bulletin notes that venues differ on whether the trigger is the last sale price or the quotation, and that not every broker offers these orders.
Where this page stops
The ten paths are constructed, not sampled: each one dips one bar, runs at 1.00 a bar, then falls at 1.00 a bar, all at closing prices, all within twelve bars. They are built that way so every row can be checked by hand, and the cost is that they contain no pullbacks inside a run, no gaps, no chop and no second attempt. A path that pulls back deeper than the trail and then resumes is the case that makes a tight trail expensive, and none of the ten does it — which is why the trailing column looks as good as it does here.
Prices are closes. There is no intraday high or low, so a stop is always filled exactly at its level; real orders gap, slip, and in fast markets fill somewhere else entirely. No spread, commission, financing, taxes or dividend is in any figure, and no probability model sits behind the outcome — nothing on this page says how often a trade runs 4.00R, only what each rule does with it if it does. The comparison holds the size, the entry and the initial stop fixed across all three rules; a trail that is never reached changes nothing.
None of this is advice, and none of it is a claim that one rule beats another in general — on a different set of paths the means would move. The order mechanics quoted above come from the pages Google showed for this word, read on 22 October 2026, and pages change. Of the ten results, three — Investopedia at number one, the Reddit thread at number two and FBS at number nine — returned 403 on every route we tried: plain fetch, a real browser, and a mobile user agent. We make no claim about what they say. The other six were read the same day.
Related guides
- Stop loss calculator — the fixed side of the pair: the stop distance your risk budget pays for at the size you chose, in pips and in price.
- Risk reward ratio — the target and the win rate it demands, which is the rule the trailing exit replaces.
- Average true range calculator — one reading of how far price travels in a bar, which is what a trail distance has to survive.
- Profit factor calculator — what a spread of outcomes like the ten above adds up to across a journal.
- Kelly criterion — the share of the account that goes on each repeat of a bet with this shape of outcome.