Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Trailing step definition

What is a trailing step?

A trailing step is a measure of price movement and a key component of a trailing stop order a type of stop-loss order that follows your position if it earns you profit and closes if the market moves against you.

The value of a trailing step is set in pips. So, a trailing step of 50 pips would only move after 50 points of movement in the price of the asset.

The trailing step is one of the parameters you set to manage the how your trailing stop-loss follows the market price. It dictates how much the underlying market needs to move before your trailing stop re-adjusts. The larger your trailing step, the more the market has to move before your stop is re-positioned, and the less frequently the ‘trailing’ would be performed.

Learn to manage your risk

Discover our range of risk management tools.

Example of a trailing step

Let’s say you want to open a long position on the FTSE 100, which is currently trading at 7400. You decide to set your trailing stop 100 points away from the current market price, at 7300, and set a trailing step of 50 pips. This means that the market will have to move 50 points before the stop adjusts.

The FTSE increases in value, up to 7450, and your trailing step indicates that it is time for your stop to move to a higher level. Because your step amount is set to 50 pips, your stop-loss is now positioned at 7350.

If the FTSE increased by another 50 points, your stop-loss would adjust to the breakeven point. And if the FTSE rises by the same amount again, your trailing stop would be moved up to a positive 50 points, at 7450.

If the FTSE were to suddenly decline in price, falling back to 7400, your trailing stop would close your position at 7450 and you would still take a profit.

Build your trading knowledge

Discover how to trade with IG Academy, using our series of interactive courses, webinars and seminars.

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Help and support

Get answers about your account or our services.

Get answers

Call 010 500 8626

Or ask about opening an account on 010 500 8624 or newaccounts.za@ig.com.

We're here 24hrs a day from 9am Saturday to 11pm Friday.