Glossary
What is Trailing Stop?
A dynamic stop loss that moves upward with the price but never moves down, locking in profits as the price rises while protecting against reversals.
A trailing stop is a type of stop loss that follows the price upward but never moves down. It's one of the most powerful risk management tools because it locks in profits during a price run while still protecting against reversals.
How Trailing Stop Works
- •You buy a token and set a trailing stop percentage (e.g., 15%)
- •The stop level starts at 15% below your entry price
- •As the price rises, the stop level rises with it (always 15% below the highest price)
- •If the price drops 15% from its highest point, the sell triggers
- •The stop never moves down — it only ratchets up
Example
Entry at $1.00, trailing stop at 15%:
- •Price goes to $1.20 — stop at $1.02
- •Price goes to $1.50 — stop at $1.275
- •Price goes to $2.00 — stop at $1.70
- •Price drops to $1.70 — SELL triggered (70% profit locked in)
Without a trailing stop, the price might have fallen back to $0.80 (20% loss).
Trailing Stop vs. Regular Stop Loss
| Feature | Stop Loss | Trailing Stop |
|---|---|---|
| Moves with price | No | Yes (upward only) |
| Locks in profits | No | Yes |
| Protects downside | Yes | Yes |
| Best for | Limiting losses | Capturing trends |
In SOL Wallet Shadow
Trailing stops run continuously on every open position. The system tracks the highest price (high watermark) and triggers a sell if the price drops by your configured percentage from that peak.
Tips
- •10-20% is typical for most tokens
- •Wider trailing stops (20-30%) work better for volatile memecoins
- •Tighter trailing stops (8-12%) suit more stable tokens
- •Combine with take profit for a complete exit strategy