A trailing stop is an option similar to stop loss. Experienced traders place a trailing stop in a market where there is a chaotic price movement and there is no clear trend. The difference is that a Stop loss minimizes potential loss, while a Trailing stop maximizes potential profit.
The principle behind trail stop is more flexible. In the case of a stop, the trade is automatically closed when the price reaches the specified level. But the trailing stop acts as a lead. It shifts as the price moves.
It's easier to understand by providing an example: you want to buy a coin for $10
Its current market price is $10.25
Open a buy position at $10.
Set a Trailing Stop at $9.80 to increase your potential earnings. This is a 2% stop if you use the entire deposit in the transaction.
If the price of the asset goes up, then your trailing stop will also move up. This will continue until the price turns down and hits your stop. As a result, you will buy a coin at the lowest price on the market.
The trailing step in the terminal settings is equal to a predetermined percentage by which the price has changed. That is, when the price rises to $11 (by 10% points), in our case, the Trailing Stop will automatically rise and will keep the pre-set risk percentage. As a result, it will be at the level of $10.78.