How to trail a stop to make big profits trading - Sophia Trades

In this article i’m going to talk about how you can trail a stop loss to make even more profit when trading the stock market. I’m going to take you through the different types of manual trailing stops you can use, and the types of scenarios they might be useful in. Let’s get straight into it!

How to trail a stop loss – what do we mean by trailing a stop?

When you ‘trail a stop loss’, it means you follow the price at a safe distance, with a stop loss – you move your stop slowly to mimic the price increases on the chart so that if the price descends, you will not lose the profit on the table you have already earned. However, it allows scope for the price to increase further and in this way, you can make profit out of long trends! What’s not to love?

To understand stop losses and risk management, please see our other article, here:

Risk Management – setting a stop loss? How to make money – Trader Pro

Please also see our YouTube video, here, on managing risk:

How to trail a stop loss – the manual way

There are some automatic ways to trail a stop but please note, they are not covered by this article. I’m going to share with you, how I trail a stop manually here. There are different scenarios which would help me to decide how ‘closely’ to trail a stop. This would depend on how much leverage i’m using, whether I have profit on the table, how far I think the price will go and how much room I believe it needs to breath and fluctuate if I’m trying to catch a long trend.

The way I trail a stop is to look for a support – the support could be either a candle (to trail a stop closely), a low on a trend (perhaps to try and trail a trend for a long time), a support line (either diagonal or horizontal) – you could also use this latter type for long trends and breakouts. I would keep my stop at the most recent support and move it manually once the price moves up into a new zone/level.

For scenarios where i’ve made a little trade, the price has gone near my target, and I believe there is a chance it could grow a little more, but I don’t want to risk the profit i’ve made already, I would trail a stop very closely, using the candles. This is the type of scenario where I would not be looking to catch a long trend with the trailing stop. Let’s look at an example…

Trailing a stop closely using candles

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Let’s say you entered the market in the above trend where i’ve marked a + sign and ‘E’. Your initial intention was to take profit near the previous high so you’ve got some profit on the table, but the market is showing no sign of resistance and you are tempted to see if it will keep going…. you can trail a stop underneath one of the red/lowest candles where it has breathed/pulled back slightly. If you placed a stop where i’ve marked the next red line/marker on the chart, the price did indeed carry on going up further until it pulled back again… at this point you could have taken profit off the table. Alternatively, after the initial stop position, if I were in such a trade, I might be tempted to move it up again, just under the next red candle – marked below:

You can see in the chart above, where I have marked ‘S2’ that this was anther red/low candle and it tried to push up further after this, but it then pulled back down. You would have got stopped out at this level which is a nice bit of profit over and above your original target!

Trailing a stop on long trends

For trailing a long trend, I would instead use the highs and lows of the trend, or diagonal/horizonal support and resistance lines. Let’s take a look at how this could work:

OK, so as you can see in the above chart, i’ve marked out where your stop loss would be moved to manually – every time the trend makes a higher low the stop is moved. I use the MACD indicator to tell me where the highs and lows are in a trend. If you would like to understand this more, please see the following article:

Amazing secrets to help you make more money trading – spot a downtrend early! – Trader Pro

Also please see my video on this:

Back to the chart! So you can see that you would have been able to ride this trend up to just before it crashed down and you would have scooped a large amount of profit from the market. You can see that the stop position ‘4’ would have stopped you out in this trade because shortly afterwards the price fell back down to this level.

Trailing a stop in horizontal steps of resistance and support

In the same way as you can trail a stop in a diagonal movement, you can also trail it in a horizontal step up movement. If you have got support and resistance lines drawn on your chart, you can move the stop up just under the last support level, every time the price pops up into a new zone. For information on understanding how to draw support and resistance levels, please see this article:

Support and Resistance – how to make more money trading – Trader Pro

Let’s take a look at what this looks like on the chart:

As you can see, there are major support and resistance levels marked on this chart in white. I’ve added S1 and S2 as suggested places to which the stop loss could be moved, as the price pushes up through these stepped levels.

I hope this helped you understand how you can trail a stop loss and take even more profit from the market. I’ve also shared below my video on this in case you find it easier to digest: