Trailing stops are a useful tool for a variety of trading strategies, but they are particularly well-suited to trend-following strategies that seek to capitalize on the momentum of a particular asset. For example, a trader might use a trailing stop to capture gains on a long position in a stock that is trending upwards.

Trailing stops are also useful in volatile markets, as they can help limit losses while allowing a trader to ride out short-term fluctuations. In this way, trailing stops can be an effective risk management tool for traders who are willing to accept some short-term volatility in exchange for the potential for long-term gains.

Finally, trailing stops can be used in conjunction with other technical indicators, such as moving averages or relative strength, to help traders identify entry and exit points for their trades. By adjusting the distance of the trailing stop in response to changes in the market, traders can better capture gains while limiting their downside risk.

Trailing stops are best suited for trading strategies that aim to capitalize on trending markets or extended price movements. These include trend-following strategies, where traders seek to ride a strong upward or downward trend while gradually locking in profits. Swing traders also benefit, as trailing stops can protect gains during medium-term price swings while allowing for further upside if the trend continues.

Momentum trading, which focuses on rapid price movements, is another ideal use case; the trailing stop adjusts as the price surges, protecting against sudden reversals. Scalping strategies, however, are less suited due to the short-term nature of trades and minimal price movement.

Trailing stops work well in volatile markets, where prices exhibit strong momentum and are invaluable in managing risk without limiting potential profits prematurely.