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A trailing stop is a dynamic stop loss that automatically moves in the direction of profit as the price moves favorably, but stays fixed when the price moves against you. It allows you to lock in progressively more profit while still protecting against reversals. The trailing distance is set in pips or points. In MetaTrader 5 a trailing stop runs in your trading terminal, not on the server: it only moves while the terminal is open and connected. Traders who need it to run all the time use a VPS.
You buy EUR/USD at 1.1050 and set a trailing stop of 20 pips. As the price rises to 1.1080, your stop loss moves up to 1.1060. If the price then drops to 1.1060, your position is closed with a 10-pip profit instead of a loss.
