Crypto glossary
Trailing stop
A trailing stop is a stop order that moves with the price by a fixed amount or percentage, locking in gains as a trade advances and closing it on a reversal.
With a trailing stop, the trader sets a distance, either in price or as a percentage, rather than a fixed level. On a long position, every new high pulls the stop up behind it, but the stop never moves down. When the price falls back by the chosen distance from its peak, the order triggers and the position closes, usually at market.
It is popular for riding trends without guessing the top. Many centralized exchanges offer trailing stops natively, often with an activation price so the trailing only starts once a trade is already in profit, and trading bots use the same logic on venues that lack it.
The hard part is the distance. Too tight and normal crypto volatility shakes the trader out early; too wide and much of the gain is given back before the stop fires. Some traders tie the distance to a volatility measure such as the average true range instead of a fixed percentage.
Example
A trader buys SOL and sets a 10% trailing stop. The price climbs from 100 to 150 dollars, pulling the stop up to 135, and when SOL later slips to 135 the position closes with a 35% gain.