Trailing Stop Loss
Trailing Stop Loss (TSL) is a dynamic Stop Loss order where the stop level automatically adjusts as the market price moves
Trailing Stop Loss corridor is the maximum distance the price can move away from the Stop Loss level. The corridor is fixed in absolute values.
Trailing Stop Loss mechanics
when trail mode is enabled, a regular Stop Loss is switched to Trailing Stop Loss;
if the asset price moves in the direction of the open position (price increase for a long position / price decrease for a short position), the TSL level can move after the price while keeping the configured corridor;
if the price stops or reverses against the position, the TSL level remains unchanged;
when the price moves back from a local extreme (high for a long position or low for a short position) by the corridor value or more, Trailing Stop Loss is executed at the current market price and the position is closed.
When Stop Loss Trailing is enabled, the Breakeven function is not available for the Smart Trade.
Configuring Stop Loss Trailing
Trailing Stop Loss is configured in Advanced mode when creating a Smart Trade or in the Trade editing window in the Tiger.com web terminal:
the Stop Loss level is set;
the trail switch is enabled to activate Trailing Stop Loss mode;
the percentage value for Trailing Stop Loss is calculated automatically and cannot be changed manually.
Trailing Stop Loss Example
The example below shows how TSL works.
Suppose an asset is bought at point (1). The Take Profit (TP) value is set to +15%, and the Stop Loss value is set to 3%. When the trail toggle for Stop Loss is enabled, price tracking is activated with a 3% corridor.
A corridor is the maximum distance the price can move away from the Stop Loss level. The corridor is fixed in absolute values.
In this example, after entering the position, the asset price decreases. In this case, the TSL value remains unchanged. When the price reverses and the corridor value exceeds 3%, TSL starts moving along with the price.
TSL keeps the price within the specified corridor and does not allow it to move away from the Stop Loss level beyond the set value.
At point (2), the direction of movement changes and the price starts decreasing. If the price falls by 3% or more from the local maximum (2), an automatic sale is executed at point (3), and the position is closed with profit.
If trailing is not enabled and a static Stop Loss is used, the trade is closed at point (4), resulting in a 3% loss instead of profit.
Trailing Stop Loss is an effective trading tool, but it is not suitable for all scenarios. Below is the situation from the previous example with one difference: after passing point (3), the price reverses again and rises to the TP level.
In this case, part of the profit will not be locked in because trailing is used instead of a regular Stop Loss.
Trailing Stop Loss performs best in a steady trend, when the price moves in one direction without significant pullbacks. To use TSL effectively, it is necessary to consider the instrument’s volatility and market mechanics.
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