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Trailing stop strategies

Structure-based vs. ATR-based trailing.

9 min · Beginner

What you'll learn

• Trail a stop behind confirmed higher lows using structure
• Calculate an ATR-based trailing stop from the highest high and a multiplier
• Compare the trade-offs of structure and ATR trailing on the same trade

Key takeaways

• A trailing stop only moves in the direction of the trade, never back.
• Structure trailing moves the stop below each confirmed higher low.
• ATR trailing sets the stop at the highest high minus the multiplier times ATR.
• Start trailing only after a pre-set trigger such as +1R or T1.
• Each method wins on different price paths, so choose one per setup and judge it over many trades.

Glossary

• Trailing stop — A stop that moves with a winning trade to lock in gains and never moves back.
• ATR (Average True Range) — The average size of a bar's full range over a set number of periods, used to measure typical movement.
• Chandelier stop — An ATR trailing method: highest high since entry minus a multiple of ATR.

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