Trailing stop: locking in without cutting too early

Trailing moves the stop behind price while the trade goes your way. It never moves against you: if price pulls back, the stop stays where it was.

The two numbers

• When it starts: how much profit is needed before trailing kicks in.
• Distance: how far behind price it follows.

The usual mistake

Too short a distance takes you out on the market's first breath. A trade that was going to give you 5R gives you 1R because trailing cut it on the first normal pullback.

Rule of thumb: look at your past winners and see how far they pulled back before continuing. Your distance should be larger than that typical pullback.