With so many things to consider when considering entering into a position it's easy to forget about the little things. A stop loss order is one of those things but can make a world of difference in your trading. A stop loss is designed to limit your loss on a position. For instance, you can set a maximum loss of 15 pips on your position. This will limit your exposure or risk.
 
A trailing stop takes this theory one step further, it's like instating a free insurance policy. A trailing stop is a stop that will automatically follow behind the market price when the position is positive by the amount of your trailing stop plus 1 pip. So, in our example when the market is positive 16 pips. Once that level has been reached, our automated trailing stop 'trails behind' the market price our defined fixed number of pips (15 pips in our case).

 
So, if you are in a long position and the market price rises, the stop loss price will rise proportionately. However, if the price falls, the stop loss price does not change. Setting trailing stops allows investors to set a limit on the maximum possible loss without setting a limit on the maximum possible gain.
 
The advantage to setting an automated trailing stop is that you don't have to monitor on a consistent basis how your trade id doing. This is especially handy when you are on a vacation or in a situation that prevents you from watching your trades for an extended period of time.
 
The disadvantage is that the stop price could be activated by a short-term fluctuation in the price. The key is picking a stop-loss level that allows for the fluctuation while preventing as much risk as possible.

As per US regulators as of May 15, 2009 Forex Dealer Members may not carry offsetting positions in a customer account but must offset them on a first-in, first-out basis under rule National Futures Association rule 2-43