How to set a trailing stop in MT4

As forex, gold, and contract for difference (CFD) trading becomes increasingly popular in Taiwan, investors need effective risk management tools to protect profits and minimize losses in volatile markets. The Trailing Stop, a dynamic stop-loss feature on the MetaTrader 4 (MT4) platform, has become a preferred choice for many traders. This article, based on Ultima Markets’ tutorial, explains in detail how to set a trailing stop, addresses the specific needs of Taiwanese investors, and provides deeper insights, pros and cons analysis, and practical examples.

What is a Trailing Stop?

A trailing stop is an automatically adjusting stop-loss tool. Unlike a traditional fixed stop-loss, it dynamically moves with market prices. When prices move in your favor, the trailing stop follows upward (for long positions) or downward (for short positions) to lock in profits; when the market reverses by the set number of points, the trade closes automatically to limit losses.

How a Trailing Stop Works

Suppose you are trading gold (XAU/USD) on MT4, and the current price is USD 2000 per ounce. You set a trailing stop of 50 points:

• Long scenario: If gold rises to USD 2050, the trailing stop moves automatically to USD 2000 (initial price plus 50 points below). If gold climbs to USD 2100, the trailing stop shifts up to USD 2050.
• Reversal scenario: If gold falls 50 points from USD 2100 to USD 2050, the trade closes automatically, locking in profit.

This mechanism is particularly useful for managing volatility, such as recent sharp gold price movements driven by geopolitical tensions.

How to Set a Trailing Stop on MT4: Step-by-Step Guide

The following steps show how to set a trailing stop on the MT4 platform for Ultima Markets clients:

1. Log into MT4 and open a trade
   • Download and open the MT4 platform, then log in with your Ultima Markets trading account credentials (if you are not yet a user, click here to register a trading account).

• In the “Market Watch” window, select the instrument (e.g., EUR/USD or XAU/USD), double-click to open the trade window, and place an order.

2. Access order management
   • After placing the order, locate it in the “Terminal” window at the bottom of MT4.

• Right-click the order and select “Trailing Stop.”

3. Set trailing stop points
   • From the menu, choose a preset distance (e.g., 15 points, 20 points) or click “Custom” to enter your own (e.g., 50 points).

• Points represent the distance between the trailing stop and current price, and should be set according to volatility and personal risk preference.

4. Confirm and activate
   • Once confirmed, the trailing stop begins working. MT4 will automatically adjust the stop level as prices change, requiring no manual intervention.
5. Check settings
   • Return to the “Terminal” window, review order details, and ensure the trailing stop is enabled.

Note: The trailing stop requires MT4 to remain running and online. If the platform is closed or disconnected, it will stop working. Using a VPS (Virtual Private Server) is recommended for stability.

Tips

• MT4 must remain open, otherwise the trailing stop will not work (a VPS can solve this). 
• Try it first with a demo account (click here to register a demo account and practice immediately), rather than risking real money.

Demo trading is an ideal way to learn, as it allows you to:

1. Familiarize yourself with platform operations and market trends.
2. Test strategies without taking actual risks.
3. Build confidence in a safe environment before entering live markets.

Advantages and Disadvantages of Trailing Stop

Advantages

• Protect profits: Lock in most gains during rapid moves, avoiding losses from reversals.
• Automated management: No need to monitor constantly, ideal for busy Taiwanese investors.
• Adapt to volatility: Well-suited to forex and precious metals, such as gold’s rise in late 2024 driven by geopolitical tensions.

Disadvantages

• Premature exits: Small settings may trigger stops during normal swings, missing larger gains.
• Technical reliance: Requires MT4 online; disconnections or server issues may disable it.
• Not suitable for all strategies: Fixed stops may be more flexible for scalpers.

Practical Tips and Notes

1. Adjust points for volatility
   • Use larger distances (50–100 points) for high-volatility assets like gold or crypto, and smaller ones (20–30 points) for lower-volatility pairs like EUR/USD.
2. Combine with technical analysis
   • Use MT4 indicators such as moving averages or support/resistance to time entries, paired with trailing stops for risk control.
3. Test and optimize
   • Use a demo account to test settings and find parameters that best fit your trading style.

Conclusion

Setting a trailing stop on MT4 is a simple but powerful skill that helps Taiwanese investors protect profits and manage risk in volatile markets. Whether trading forex, gold, or CFDs, mastering this tool boosts trading efficiency. Combined with trends and personal strategy, flexible use of trailing stops will be key to investment success in 2025.