In plain English
What Trailing stop means
A trailing stop follows price in one direction only. For a long position, the stop moves up as the market rises and stays put if price falls. That means it can protect some profit without requiring a trader to manually reset the stop after every move.
Why it matters
Trailing stops automate part of exit management and can reduce the need to constantly monitor a position. The tradeoff is that normal volatility can still knock out the trade before a larger move develops, especially if the trail distance is too tight.
Example
If you are long EUR/USD at 1.0800 and set a 30-pip trailing stop, the stop might start at 1.0770. If price rises to 1.0850, the stop could move to 1.0820. If price then falls, the stop stays at 1.0820.
Quick answers
Common questions
Does a trailing stop move both ways?+
No. It moves only in the direction that reduces risk on the open position and does not move backward.
Is a trailing stop guaranteed at the trigger price?+
No. Once triggered, the fill can still slip from the stop level.
Sources