A trailing step is a concept used in trading and investing to manage stop-loss orders and capture potential profits. It refers to the distance at which a trailing stop order is adjusted as the price moves in a favorable direction.

When a trailing stop is set with a trailing step, it adjusts the stop-loss level based on a specified increment or percentage. As the price of an asset increases (in the case of a long position) or decreases (in the case of a short position), the stop-loss order is automatically moved by the trailing step.

For example, if a trailing step is set at $1, and the price of an asset increases by $2, the trailing stop order would also move up by $2, effectively protecting a $1 profit. This allows traders and investors to secure gains while still allowing the asset to potentially appreciate further.

Trailing steps are useful in capturing profits during uptrends or downtrends while minimizing the risk of losing those gains if the price reverses. It is important to carefully consider the trailing step value based on the volatility and characteristics of the asset being traded.

A trailing stop is a dynamic stop-loss order that adjusts automatically as the market price moves in the trader’s favor. Unlike a fixed stop loss, it "trails" the price at a set distance (either in points or percentage), locking in profits while allowing room for further gains. For example, if a trader sets a 50-pip trailing stop on a long trade, the stop loss moves up each time the price rises by 50 pips, but stays in place if the price falls.

Trailing stops help maximize profits during strong trends while protecting against reversals. However, in choppy markets, they may trigger prematurely due to normal price fluctuations. They are ideal for trend-following strategies but require careful placement to avoid unnecessary exits.