A Trailing Stop is a mechanism to protect yourself when the market takes an unexpected turn. This type of order allows a trader to fill an order once the price falls below the top price by a specified amount, referred to as the price distance.
A trader holds a Bitcoin and the price is rising. If it is sold now, the trader may miss out on more upside. To get as close as possible to the top, a trader can set a Trailing Stop with a $200 price distance.
At any point on the upside when the price drops $200 below the top price, the order will be filled. If the price rises to $14,000, then begins to drop the order will fill at $13,800. In essence, it creates a Stop Order of $200 below the market price and keeps raising the stop price as the market price increases.