How to Set a Trailing Stop on MT4

How to Set a Trailing Stop on MT4?

Set a Trailing Stop on MT4 and MT5 by following these steps:

• Open an order
• In the order row click the right mouse button and select option “Trailing Stop“
• Select predefined point or select Custom option
• Set desired number of pips you want to trail

These steps are needed to set Trailing Stop on MT4 and MT5.

What is a Trailing Stop?

It is a dynamic, moving Stop Loss that moves automatically when your order reaches a certain profit.

Why would you set a Trailing Stop?

Because you do not need to wait on your PC or smartphone to get in profit just to move your Stop Loss so your order cannot be closed with loss, but only with profit.

In this lesson and video lesson you will see what is Trailing Stop, how to set Trailing Stop and why you should use Trailing Stop.

What is Trailing Stop

Trailing Stop is an expert advisor built in Metatrader 4/5 platform which is used as a tool to move the stop loss level when the order becomes profitable.

How Does a Trailing Stop Work?

Trailing Stop works by setting the number of pips at which the stop loss level will change the value as soon the order is profitable by the number of set pips.

By that I mean if you have an open order and you set trailing stop to 10 pips that will mean when the order is in profit for 10 pips the stop loss will move to the open price of the order.

Here is an example:

One BUY order is open with entry price at 1.1234 with stop loss set to 1.1200. We have a difference of 34 pips between stop loss and the open price.

1.1234 – 1.1200 = 0.0034 = 34 pips

If you set trailing stop to 10 pips on this order that will mean that when the order is in profit 10 pips (at price 1.1244), and that when the price goes from the entry price 1.1234 to 1.1244, the trailing stop will activate and it will move stop loss to the entry price.

Entry price = 1.1234

Stop Loss = 1.1200

Current price = 1.1244

Profit = Current price – entry price

Profit = 1.1244 – 1.1234 = 0.0010 = 10pips

When trailing stop moves the stop loss we will have this situation:

Entry price = 1.1234

Stop loss =  1.1234

Current price = 1.1244

You can see how trailing stop has followed the profit and waited until it reaches 10 pips of profit. When that target is reached the trailing stop function will move stop loss to 10 pips difference from the market price.

Can a Trailing Stop Move Backwards?

Now what would happen if the price did not move from 1.1234 to 1.1244 and did not make 10 pips of profit.

If the price goes in profit for 5 pips, and that is from 1.1234 to 1.1239, then the trailing stop will not activate and it will not move the stop loss level.

If the price starts to move down, that means it starts to go in loss, from 1.1234 to 1.1230, that will not activate trailing stop.

If the trailing stop moves backwards the stop loss will remain where it was set. That means at 1.1200.

So, if the price continues to move backwards the order will close at 1.1200 price level.

The trailing stop does not move backwards and moves stop loss level by increasing the loss. It will not move the stop loss below 1.1200 to increase the loss on that order.

Trailing stop is used to move forward the stop loss level when the order is in profit so you lock that profit and reduce the loss on the order.

Is Trailing Stop Automatic?

Trailing stop is an automatic function which moves the stop loss automatically when activated.

Trailing stops have one condition and that is the Metatrader platform must be active and have internet connection.

Metatrader not Active

In case if the Metatrader is not active that will mean the trailing stop which is expert advisor will not be active. Expert advisor is only active if the trading platform is active.

If you close the metatrader the trailing stop will not work even if you have activated it and set a number of points.

To solve that issue you should leave your computer active with a metatrader open and connected to the internet. And, also, you need to have your trading account active and connected to the trading server.

If you cannot have the computer active the whole day because of trailing stop you can use Forex VPS solution where you have your trading platform active on the cloud which is always active.

Internet Connection Down

Second case is if you do not have an internet connection which will mean your trading account is not active. When you try to connect you get a message that you cannot login.

Read more: Metatrader Login Problem

This is because you do not have access to the trading server to connect your account. Without a trading server you will not receive any quotes on the charts, the trailing stop will not work as many other functions for trading.

Are Trailing Stop a Good Idea?

Trailing Stop is a good idea if you need help in trading to move the stop loss level when the order is in profit.

Let’s say that you open BUY trade with a stop loss level set to 50 pips and take profit to 250 pips.

Stop Loss = 1.1000

Entry price = 1.1050

Take Profit = 1.1300

And you would like to move that stop loss just in case if the order becomes profitable and reaches 150 pips profit which is 1.1200 level.

You would do that to prevent order closing with loss after being in profit for 150 pips. Because sometimes it can happen that the order is profitable and reaches 200 pips of profit, in this case, and then goes down and closes with stop loss triggered.

To lock the profits you have made, in this case 150 pips, you can activate trailing stop to move your stop loss level to the entry price.

It is good to use trailing stop to lock the profit, in this case 150 pips, because it is possible that the market will not turn back 150 pips and close the order. But, if the market turns against you and goes down you will have this order closed with the entry price. Which means 0 loss.

It is better to close the order with 0 loss and 0 profit then close it with 50 pips loss.

How to Set a Trailing Stop in MT4 Android

Trailing Stop on MT4 Android is not possible to set because expert advisor is not available on the android version.

Because trailing stop is a built-in expert advisor that needs a platform to run, MT4 mobile version is not suitable to run the trailing stop function.

You should use Metatrader 4 desktop version.

Do Professional Traders Use Trailing Stop?

Professional traders use trailing stop in trading to move the stop loss level and prevent order closing with loss after reaching a certain profit.

Trailing stops are not only for retail traders or novice traders. Anyone who trades can use this function to prevent profitable trade from becoming a losing trade if you are not on the platform all the time.

Do Day Traders Use Trailing Stop?

Day traders are using trailing stops to automatically move the stop loss level when they are not in front of the computer or if they are trading lots of trades at the same time.

Trailing stop allows them to automatically move stop loss when the trade reaches a certain profit.

if you are trading lots of symbols at the same time on your computer it is hard to follow all of the trades. So, to help yourself you can use trailing stop and automatically move stop loss when trade becomes profitable.

Differences Between Stop Loss and Trailing Stop

Difference between stop loss and trailing stop is in functionality where stop loss is a fixed level that does not move and trailing stop is a dynamic function that moves stop loss when the order is in profit.

This means that stop loss if set to 1.1050 level will not move if the price goes into profit for 50, 100 or any other number of pips. It will remain at 1.1050 all the time until you move that stop loss level or you delete stop loss or until the trade closes with loss or profit.

Trailing stops will not remain all the time on the same price level if the price goes into profit. so, If you set trailing stop to 50 pips it will not move until the price reaches 50 pips profit. If it reaches 51 pips trailing stop will move stop loss level to 1 pips. If it goes to 52 pips of profit the trailing stop will move stop loss level to 2 pips.

Trailing stop will not move the stop loss level if the price goes in loss. Because trailing stop is not meant to increase loss on your trade, but only to lock the profits so your trade does not close with loss after reaching a certain profit.

Can Market Makers See Trailing Stop?

Trailing stop can be seen by market makers when activated and that means when trailing stop moves stop loss level after trade reaches certain profit you define with trailing stop.

Why does that happen?

If you put stop loss on the trade that level is sent to the trading server on the broker side. And then when the trailing stop moves the stop loss after order is in profit the new stop loss level will be seen on the trading server.

If you do not put stop loss on your trade and you activate trailing stop that will not be seen on the trading server or market maker.

But, as soon your trade is in profit for a certain number of pips which trailing stop is defined your trade will have stop loss level set. Because trailing stop will define a new stop loss level on that trade and that level is then sent to the broker server where market maker can see order details.

Trailing stop is not an invisible function if activated because it defines stop loss level in that order.

Can a Trailing Stop Fail?

Trailing stop can fail if you do not have your trading platform running because the trailing stop function cannot work if there is no connection with the platform.

Trailing stop is a function that is built inside a metatrader. So if the metatrader does not run the trailing stop will not run.

If you set trailing stop on your order and you close the trading platform the trailing stop will fail to move stop loss when the order moves in profit.

The reason is behind the order you open and trailing stop.

Order you open with stop loss and take profit level is sent to the trading server of your broker. The trading server receives your request to open an order with stop loss and take profit level.

And then you can close your computer because order details, entry price with stop loss and take profit levels, are on the trading server of your broker.

And if you close your computer and leave that order will be still open on the trading server of your broker.

But, if you activate trailing stop on that order, and you close your trading platform the trailing stop will not work. because trailing stop is not active as your trading platform.

If you do not want trailing stop failure you need to leave your trading platform running on your PC or on VPS platform.

Trailing stops will not fail if you have your platform running and connected to the trading server.

Second case where a trailing stop could fail is when the market experiences a gap. And the gap is when the market opens with a price difference between market close and market open. That is caused by the high market volatility.

Read more: What is Volatility in Forex

So, when the gap happens even if you have trailing stop active and the stop loss has been moved to be in profit, the gap could make your order close to loss when the price opens below your entry price.

This is something that you cannot change, but one of the ways is to avoid trading when the market is highly volatile that could cause the market gap.

Can You Lose Money With a Trailing Stop?

You cannot lose money with trailing stop if trailing stop is activated. But, you can lose profit if the trailing stop is active.

Let me explain these two scenarios.

In the first case if the trailing stop is activated that means your stop loss in the moment when trailing stop is activated is moved to the entry point. In the worst case scenario you will have an order closed with an entry price which means you will close the order with $0 profit/loss.

In the second case if the trailing stop is activated and moves stop loss above entry price, but then the market turns around and reverses back and closes the order with stop loss which was moved by trailing stop. Then you would lose potential profit you could make if the market stopped at the entry price and then continue to move in the right direction.

But, the second scenario is something that should not bother you because if the trailing stop has moved stop loss beyond entry price you will have that order closed with profit in any way. So, it is better to close the order with some profit then to close trade with loss in any case.

So, with trailing stop you could lose only potential money you could make if the market moves in your direction.

What Causes Trailing Stop?

What causes trailing stop to move is the profit on the order where trailing stop is set.

If you set trailing stop to 50 units that will mean you need 5 pips to activate trailing stop. When the order goes to 5 pips in profit trailing stop will activate and move stop loss 5 pips away from the current market price.

And if the price does not fall down those 5 pips, but continues to increase the profit the trailing stop will continue to move stop loss 5 pips away from the current market price.

How Do You Trigger a Trailing Stop Order?

Trailing stop is triggered by putting a number of points for trailing stop and by order going into profit for that number of pips.

So, you trigger a trailing stop by activating the function and then predicting where the market will move and make profit.

If the order does not reach trigger level for the trailing stop then the trailing stop will not trigger and it will stay inactive on that order.

When Should Trailing Stop be Set?

Trailing Stop should be set on an order where you expect that the price will reach a certain price level and then it will not get back to the entry point, but it will continue to move further.

The certain level is far away enough to have space to retrace a little bit, and not reach the entry level.

And if you cannot wait until the market reaches that level or profit target level then you should set a trailing stop. Because trailing stop will move stop loss to the entry point if triggered and it will trail your profit as the profit increases.

This allows you not to be in front of your computer and wait how the order will end. This allows you to be in profit with that order without closing an order with loss, but only with profit.

Advantages of the Trailing Stop

Advantages of the trailing stop are:

• in bigger trend trailing stop will move slowly stop loss and lock profits as the price moves in your direction which allows you lock high profits
• allows you to move away from your computer and trading platform, but securing your profit if the price reached trailing stop trigger level
• if price goes into profit and activates trailing stop, but then reverses back and closes with stop loss activate you would end up at least breakeven or in profit because trailing stop when activated moves stop loss to the entry level
• trailing stop does not cost anything
• trailing stop allows you to set stop loss and move dynamically without emotions because it is set and forget option

Disadvantages of Trailing Stop

Disadvantages of trailing stop are:

• you never know where to set the trailing stop to be bulletproof on each order. Trading is dynamic business and market is volatile which can trigger or not trigger trailing stop
• trailing stop can be activated and quickly close the order if the market is volatile even the order could be profitable in the future
• gaps are hard to predict which could close your order with larger loss then you wanted with trailing stop activated
• In the range market trailing stop could be activated too much time resulting in many losses. Use trailing stop in the trending market
• Not available when the trading platform is not active. You need VPS to run the platform all the time to have trailing stop active

Why Use a Trailing Stop Instead of a Stop Loss?

Use Trailing stop instead stop loss to lock the profits when the order is in the profit for a certain amount of units.

Trailing stop allows you to move stop loss level as the profit rises which will secure profits on that trade if the market moves against you.

Stop loss level is static and fixed level which does not move in any case. If the market reaches price level close to take profit and then reverses it will close with stop loss triggered which will cause loss on your account.

Trailing Stop MT4 Indicator

Trailing stop MT4 indicator is ATR trailing stop indicator that helps you calculate the average movement on the chart and based on the result sets the trailing stop.

Average True Range calculates the volatility of the market and based on that calculation draws a line on the chart that represents the best place to put stop loss.

If you want you can use the number of pips to set trailing stop based on ATR or you can use percentage on ATR calculation.

ATR trailing stop indicator calculates where is the best position for stop loss when the market is moving up or down.

If the market is moving down the trailing stop indicator puts a line on the chart above which represents the potential stop loss level.

If the market is moving up the trailing stop indicator puts a line on the chart below which represents the potential stop loss level.

Trailing stop indicator is an indicator that moves stop loss as the market changes. It will not automatically move your stop loss on open order, but you need to manually move it.

What you can do with the trailing stop indicator is to see what is the average movement and based on that set the trailing stop units.

If the trailing stop indicator shows 50 pips above the current market price then you could put a trailing stop to 50 pips. When the market goes into profit 50 pips trailing stop on a metatrader would move your stop loss and follow the market change with 50 pips difference.

• MT4 Trailing Stop EA

  Trailing stop EA is an expert advisor that moves your stop loss level based on the conditions you define with the trailing stop EA.

  That means that there could be lots of conditions inside EA you can set, but that depends on the EA you are using.

  For example there are trailing stop EA:

  • can set trailing stop units on all open orders at the same time
  • can set trailing stop to activate when the two or more conditions are met
  • when the market reaches a certain profit and not number of pips. So instead defining number of units you can define profit in the account currency

  Here are one of the trailing stop EA:

  • EarnForex
  • ForexTradingStrategies4u

Trailing Stop FAQs

The most frequently asked questions that traders have about trailing stops are: