A regular stop loss stays at one price. Trailing stop loss keeps moving with your profit. When your stock price goes up, your stop loss automatically follows it up, staying at a fixed distance below. This fixed distance is known as trailing gap. This parameter allows traders to customise the stop loss automatically. In case the stock price reverses, the stop loss get triggered where its last stop loss price reached before reversal.

Example

You buy a stock at ₹100 and set a trailing stop loss with a ₹5 gap.

• Stock rises to ₹110 - Your stop loss moves to ₹105
• Stock rises to ₹120 -Your stop loss moves to ₹115
• Stock drops to ₹115 - Stop loss triggers, position exits

You just locked in ₹15 profit instead of watching your gains disappear!