A trailing stop differs from a regular stop-loss order in how it adjusts to changing market conditions.

A regular stop-loss order is a preset price level at which a trade will automatically sell or buy an asset to limit losses. The stop-loss remains fixed and does not change, regardless of price movement. For example, if you set a stop-loss at $100 on a stock, it will trigger a sale when the stock's price falls to $100 or lower, protecting you from further losses. However, if the stock’s price rises, the stop-loss stays in place, and you won’t capture additional gains.

A trailing stop, on the other hand, moves with the asset’s price. It sets a stop price at a specified distance (in percentage or dollar terms) from the current market price. As the stock price rises, the trailing stop adjusts upward, locking in profits as the price increases. However, if the stock price falls, the trailing stop remains fixed at the highest price it reached and will trigger a sale if the price falls by the specified amount.

While both orders aim to protect against losses, a trailing stop dynamically adjusts with favorable price movements, offering flexibility in securing profits.