|Trailing stops are designed to follow the market price of a stock by a percentage amount or fixed dollar amount. The higher the market price of the stock, the higher will move the trailing stop.
If the stock's market price moves lower, the trailing stop will not move. The concept is that you can merely set the maximum amount that a stock can move lower to trigger the stop.
Once the market price of the stock touches or falls below the trailing stop price, the stock is then sold at market to the next willing buyer.
They are virtually guaranteed to take you out of a position. Each little up tick in a stock's price will pull the stop loss order higher and higher, eventually triggering the stop on the next downward tick of the stock's market price.
See also ﬂoating stop.
Trailing Stop Loss
Using a trailing stop loss allows the trader to maximize profits on a stock as it ...
This type of stop loss order is known by various names, such as "stop," "stop loss," ...
This is an order that says once the stock's market price touches or goes below the ...
« View the Stock Market Dictionary »
Latest Financial Advice
- Impact of News on Trader’s Psychology and Market Trends
- Overconfidence Bias in Stock Trading: A Critical Analysis
- Mastering Mindfulness Practices for Traders
- Impact of Market Volatility on Individual Psychology
- Leveraging Intuition in Stock Trading: A New Approach
- Mastering Mental Strategies for Effective Swing Trading
- Harnessing Behavioral Finance to Anticipate Market Trends
Free Investment Advice
|Get free stock market tips and investing advice by subscribing to our newsletter:
* Your information will not be shared or sold.
- Trading Basics
- Investing 101
- Investing Essentials
- Understanding the Risks
- Beginning to Trade
- Trading Strategies
- Trading Psychology
- Retirement Investing
- Personal Finance
- Advanced Trading
- Penny Stocks
- FOREX Trading
- Commodity Futures
- Stock Tips
- Going Public
- Real Estate
- Research Tools
- Stock Spam
- Stock Market Dictionary