## Trailing Stop is a tool that works for you while you sleep

If you're a busy trader and can't live in charts, then a trailing stop is your savior. Essentially, a trailing stop is an automatic assistant that monitors the price and closes the position at the right moment. No need to manually move stop-losses every time the price rises.

## How does it work

The concept is simple: a trailing stop is an advanced version of a regular stop order that moves along with the price. Imagine: you bought a coin at $100. If the price drops by a certain percentage or amount, the order will trigger automatically. But here's the catch — if the price starts to rise, the trigger point moves up with it.

There are two types of this tool:
- **Percentage-based**: the trigger is set at a specific percentage below or above the current price
- **Fixed amount**: the trigger is tied to a specific number, for example, $30 below the market

For example, current price is $100, you set a trailing stop at 10% below. If the price drops to $90 — it will trigger. But if the price jumps to $200, the trigger will automatically move to $180. If it then falls to $180, the order will execute, locking in profit at the most advantageous point.

## Why is this especially useful in volatile markets

Cryptocurrency prices jump around like crazy. A trailing stop allows you to lock in profits while the price is rising, but also protects against large losses if the trend reverses. This is especially convenient when the market moves in your favor but the direction can change at any moment.

Busy traders find this tool a lifesaver — no need to constantly watch the screen. Set the parameters, and exchange bots will do the rest.

## Real example with a percentage stop

Price starts at $100, you set a stop 10% below the market:
- Price drops to $90? The order triggers and the trade closes
- Price rises to $150, then drops 7% to $140? The stop won't trigger because the trigger has already moved up — Price reaches $200, then drops 10% down to $135
? That’s when it triggers, and you exit with a good profit

## And with a fixed amount

Same price $100, but you set the stop $180 lower:
- Drop to (— it triggers
- Rise to $150, drop ) to $30 — it won't trigger $70 the trigger is at $120$20
- Rise to $200, drop $130 to (— it will execute

## Main advantages

**Profit locking without worries.** The main benefit — you not only protect what you've already earned but can also gain more than planned because the trigger moves with the price.

**Risk management on autopilot.** Regardless of the price direction, the tool works. This is especially useful in such unpredictable markets as crypto.

**Emotions are powerless.** Volatility prompts impulsive decisions? Automation saves the day. The order will trigger according to your parameters, without panic or greed influencing it.

**Forget manual work.** If you've done your analysis and opened a position, no need to check the price every 5 minutes and move stops. The system will close the position itself.

**Full control in your hands.** You choose the percentage or amount that fits your risk level and trading strategy.

## Pitfalls to watch out for

**Slippage can ruin calculations.** In volatile markets, the actual execution price often differs from the expected trigger point. This is especially painful when the price drops sharply and there aren't enough buy orders.

**Not ideal for long-term positions.** If you're ready to hold a coin for years and tolerate fluctuations, this tool might close your position prematurely.

**Weak in sideways markets.** When the price just flatlines and doesn't go up or down, a trailing stop can trigger on small movements. You risk losing money on fees and missing good trades.

**Lag behind the market.** Sometimes the tool doesn't trigger in time, and the price manages to fall below the trigger, leading to a worse exit.

**Sharp zigzags in both directions.** If the price jumps back and forth around the trigger quickly, you might catch multiple small losses instead of one good trade.

## What to consider before setting up

Position and margin are not frozen until the order triggers — check if you have enough funds. The stop may not trigger due to price limits, margin issues, trading access problems, or technical failures. Even if the trigger activates, the market order might not be fully filled.

## Final thought

A trailing stop isn't a cure-all, but a truly useful tool for those who want to earn without stress. Yes, there are downsides like slippage and inefficiency in sideways markets. But when the market moves in your favor — it's your best friend, automatically protecting profits and minimizing losses. The key is to choose parameters correctly according to your risk level and the volatility of the specific asset.