When you place a Trailing Stop Loss order, you will need to enter a trailing gap. If the market moves in your direction, the stop-loss follows the Last Traded Price (LTP) of the stock by the trailing gap set by you. The order is triggered when the LTP breaches the stop-loss price, i.e. the stop loss is hit.

Example:

A user is placing a sell trailing stop-loss order.

The current LTP of the scrip XYZ is 100 and you set a Stop-loss at 95 with a Trailing gap of 1 and Limit price of 94.

LTP	Stop-loss (Trigger price)	Limit Price
100	95	94
101	96	95
104	99	98
104.5	99	98
105	100	99
103	100	99
100	Stop-loss triggered at 100	Limit order placed at 99

As shown in the table above, the correlation between the Last Traded Price (LTP) and the Stop-loss value is illustrated.

The initial LTP when the Trailing Stop Loss order is placed was 100, so it is taken as the base for calculation.

In this case, the trailing gap is Rs.1, meaning that for every 1 point move in the LTP, the Stop-loss value will move by the same value in the same direction.

So, as the user starts making a profit (in favour of LTP movement):

• When the LTP is 101, the Stop-loss moves to 96.
• When the LTP moves to 104, the Stop-loss also moves by 3 points to 99.
• Now, when the LTP moves to 104.5, the Stop-loss remains the same as the trailing gap is set as 1, so it will wait for a 1 point movement from the previous set price, i.e., 104.
• So, when the LTP reaches 105, the Stop-loss moves to 100.
• When the LTP moves down to 103, the Stop-loss remains at 100 and is triggered when the LTP finally reaches 100.
• A limit order is triggered once the Trailing Stop-loss order is triggered.