When you enter a trailing stop on an open position, you select a specified number of pips or points (10 points = 1 pip) between the stop and the current price. MetaTrader 4 will then place the trailing stop in two parts.
i) The market must first move in your favour by the number of points that you set and then it will place a stop loss order.
ii) That stop loss order will then automatically update as long as the market moves your way so that it 'trails' the current price by the number of points you set.
When the market moves against your position after the trailing stop loss has been set, the stop loss remains set at the last trailing price that it reached when the market was moving in your favour. You can confirm this price by looking at the S/L column within the Trade tab or the Open and Pending Orders window.
Remember, trailing stops are still subject to slippage.
If you set a trailing stop and then log out of MetaTrader before the market moves in your favour by the number of points that you entered, then the trailing stop loss order will not be placed. If you set a trailing stop and log out of MetaTrader after the market moves in your favour and triggers the trailing stop, the stop loss order will not trail the market. It will work as a hard stop at the last price that the stop loss was at when you logged off. In this scenario, when you log back into MetaTrader 4, if the stop loss hasn’t been triggered, it will resume trailing the current market price by the number of points that you specified between the stop and the current price.
Say that you are long EURUSD at 1.3500. You want to protect what you’ve earned so far; so you enter a 20-point trailing stop order.
Once the market hits 1.35200, the trailing stop becomes active in MetaTrader 4. At 1.35200, the stop will trail the current price as long as the market moves your way and you are still logged in.
When you log out of MetaTrader the market is at 1.35300. Even though market moves activated your trailing stop, your trailing stop becomes a regular stop loss order at 1.35100, 200 points below the last market price.
While you were logged out, the EURUSD didn’t move below 1.35100 (so your stop loss was never triggered). In fact, the EURUSD rose steadily to 1.36000. In this case, when you log back in, MetaTrader will adjust the stop loss to 1.35800 and resume trailing the current market moves by 200 points.