What is Trailing Stop Loss on eToro?

Written by Mike Druttman

Reviewed by Nadav Zelver

Trailing Stop Loss (TSL) on eToro is a type of Stop Loss order that automatically adjusts with market movements, provided the market is moving in your favor. It maintains a set pip distance from the current market rate, either above or below the market price, depending on whether you are in a SELL or BUY position. However, if the market moves against you, the TSL remains stationary, not adjusting further.

Understanding TSL Further

To understand the TSL's practicality and effectiveness, I personally experimented with this feature on the eToro platform, testing its responsiveness to market changes and its ability to maintain a locked-in pip distance.

My Experience with Using TSL

The platform's Trailing Stop Loss tool is ingeniously designed to provide flexibility and protection in a volatile market. When setting up a TSL in my trades, I experimented by specifying a fixed number of pips both above and below the market price. This was to verify if it can consistently maintain its predetermined distance from the actual market rate.

📈 So how did it go?

As the market moved in my favor, this specific eToro Stop Loss order type adjusted accordingly, maintaining the pip distance I had set. This feature allowed me to maximize potential profits while minimizing losses, as the TSL locked in profits by moving with the market.

When the Market Moved Against Me

One of the critical observations during my testing was the behavior of the TSL when the market moved against my position. In such scenarios, it did not move. This stationary behavior is a crucial aspect of the TSL, as it prevents the stop loss from moving in an unfavorable direction, thereby safeguarding my position from further losses.

My Key Takeaways

• The TSL is an adaptive tool that moves with favorable market changes, maintaining a set pip distance.
• It is particularly useful in volatile markets, allowing traders to secure profits while limiting potential losses.
• Its stationary feature during unfavorable market movements provides an added layer of risk management.

From my personal experience, eToro's TSL proved to be an invaluable feature for managing trading risks. Its ability to adapt to market movements while maintaining a predetermined distance offers a balance between profit maximization and loss minimization. Utilizing this can be a strategic move, especially in fluctuating market conditions so you'll have better control over your investments.