Trailing stops are one of the most underused tools in a trader’s playbook. Most traders spend hours obsessing over entries, but then wing the exit or bail too early the moment a red candle appears. That’s where trailing stops come in. They give your trades room to breathe, while gradually reducing risk as price moves in your favour.
If you’ve ever caught a good move and felt unsure about how long to hold it, this one’s for you.
Here are three practical ways to trail your stop, stay in the trade, and help manage profitable trades objectively.
1. Trail Behind Structure
This is the simplest and most intuitive method. As the trade moves in your favour, you move your stop just behind the most recent swing high or low. In a long trade, that means raising your stop to sit just below the latest higher low. In a short, you drop it just above the most recent lower high.
This approach works best in clean, trending conditions. It gives the trade room to develop naturally without forcing you to guess the top. You won’t capture the absolute high, but you’ll often stay in the move longer than most.
It also keeps you in rhythm with the market. If the structure is broken, it’s a pretty good sign that the trend is changing or stalling and that’s a logical place to step aside.
Example:
Here’s a clean example of using structure to trail stops on a momentum trade. The entry came on a break and retest of resistance, with the initial stop placed just below the retest level. As the trade moved higher, a series of higher swing lows developed, providing clear reference points to adjust the stop.
It’s not designed to catch the exact top and that’s fine. The goal is to follow price action with minimal lag, using objective structure rather than guesswork.
EUR/USD Hourly Candle Chart
Past performance is not a reliable indicator of future results
2. Use Moving Averages
Trailing stops don’t have to follow every single swing. Sometimes, a smoother option is better, especially if you want to stay in a move that’s trending hard. That’s where moving averages come in.
A short-term exponential moving average like the 9 or 21 EMA can act as a dynamic trailing stop. As long as price remains above the average, the trend is intact and you stay in. If price closes below the EMA in a long trade, or you get a crossover in the opposite direction, that can signal an exit or at least a scale-down.
This method works best in fast, directional markets. It won’t suit every condition, but when the move is strong, letting a trade run along the moving average keeps things simple and stress-free.
Example:
In this short-term 5-minute chart example, the 21 EMA acts as a dynamic trailing stop. There are two common approaches. You can wait for a candle to close below the 21 EMA, or use a crossover trigger where the 9 EMA crosses under the 21 EMA. The choice depends on how tightly you want to manage the trade and how much room you are willing to give it.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
3. Volatility-Based Stops (ATR)
When the market gets fast and messy, a fixed stop can either get hit too easily or feel too far away. That’s where volatility-based stops come in. The most common tool for this is the Average True Range (ATR).
Instead of using swing points, you trail your stop a set number of ATRs behind the current price. If ATR is rising, your stop gives the trade more room. If volatility shrinks, the stop tightens naturally. It’s an adaptive approach that works well in conditions where price is expanding or moving fast.
A popular setting is to use two times the current ATR value, but you can adjust it to suit your timeframe or risk tolerance.
Example:
This is a classic wedge breakout setup in gold. A trailing stop set at two times the ATR helps manage risk while giving the trade enough room to breathe. As price moves in your favour, the stop tightens automatically based on volatility. It’s worth remembering that trailing stops are only adjusted in one direction. Once set, they follow the move but are never loosened, which means the stop will eventually take you out as momentum fades or the market turns.
Gold Daily Candle Chart
Past performance is not a reliable indicator of future results
Decide on Your Technique BEFORE You Place the Trade
There’s no perfect way to trail a stop. Each method has its strengths. Structure-based stops keep you aligned with price action. EMAs are smooth and simple. ATR lets volatility do the work for you.
The most important thing is to make a decision before you place the trade. Know whether you’re using a manual swing method or a dynamic indicator. Know what would trigger a move in your stop, and what would keep it steady. Avoid changing the plan just because the trade gets emotional.
Trailing stops give you freedom. They let you step back, protect your capital and give your best trades a real chance to develop. Used properly, they enhance trade management consistency.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
If you’ve ever caught a good move and felt unsure about how long to hold it, this one’s for you.
Here are three practical ways to trail your stop, stay in the trade, and help manage profitable trades objectively.
1. Trail Behind Structure
This is the simplest and most intuitive method. As the trade moves in your favour, you move your stop just behind the most recent swing high or low. In a long trade, that means raising your stop to sit just below the latest higher low. In a short, you drop it just above the most recent lower high.
This approach works best in clean, trending conditions. It gives the trade room to develop naturally without forcing you to guess the top. You won’t capture the absolute high, but you’ll often stay in the move longer than most.
It also keeps you in rhythm with the market. If the structure is broken, it’s a pretty good sign that the trend is changing or stalling and that’s a logical place to step aside.
Example:
Here’s a clean example of using structure to trail stops on a momentum trade. The entry came on a break and retest of resistance, with the initial stop placed just below the retest level. As the trade moved higher, a series of higher swing lows developed, providing clear reference points to adjust the stop.
It’s not designed to catch the exact top and that’s fine. The goal is to follow price action with minimal lag, using objective structure rather than guesswork.
EUR/USD Hourly Candle Chart
Past performance is not a reliable indicator of future results
2. Use Moving Averages
Trailing stops don’t have to follow every single swing. Sometimes, a smoother option is better, especially if you want to stay in a move that’s trending hard. That’s where moving averages come in.
A short-term exponential moving average like the 9 or 21 EMA can act as a dynamic trailing stop. As long as price remains above the average, the trend is intact and you stay in. If price closes below the EMA in a long trade, or you get a crossover in the opposite direction, that can signal an exit or at least a scale-down.
This method works best in fast, directional markets. It won’t suit every condition, but when the move is strong, letting a trade run along the moving average keeps things simple and stress-free.
Example:
In this short-term 5-minute chart example, the 21 EMA acts as a dynamic trailing stop. There are two common approaches. You can wait for a candle to close below the 21 EMA, or use a crossover trigger where the 9 EMA crosses under the 21 EMA. The choice depends on how tightly you want to manage the trade and how much room you are willing to give it.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
3. Volatility-Based Stops (ATR)
When the market gets fast and messy, a fixed stop can either get hit too easily or feel too far away. That’s where volatility-based stops come in. The most common tool for this is the Average True Range (ATR).
Instead of using swing points, you trail your stop a set number of ATRs behind the current price. If ATR is rising, your stop gives the trade more room. If volatility shrinks, the stop tightens naturally. It’s an adaptive approach that works well in conditions where price is expanding or moving fast.
A popular setting is to use two times the current ATR value, but you can adjust it to suit your timeframe or risk tolerance.
Example:
This is a classic wedge breakout setup in gold. A trailing stop set at two times the ATR helps manage risk while giving the trade enough room to breathe. As price moves in your favour, the stop tightens automatically based on volatility. It’s worth remembering that trailing stops are only adjusted in one direction. Once set, they follow the move but are never loosened, which means the stop will eventually take you out as momentum fades or the market turns.
Gold Daily Candle Chart
Past performance is not a reliable indicator of future results
Decide on Your Technique BEFORE You Place the Trade
There’s no perfect way to trail a stop. Each method has its strengths. Structure-based stops keep you aligned with price action. EMAs are smooth and simple. ATR lets volatility do the work for you.
The most important thing is to make a decision before you place the trade. Know whether you’re using a manual swing method or a dynamic indicator. Know what would trigger a move in your stop, and what would keep it steady. Avoid changing the plan just because the trade gets emotional.
Trailing stops give you freedom. They let you step back, protect your capital and give your best trades a real chance to develop. Used properly, they enhance trade management consistency.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.