Trailing Stop Order
A trailing stop order is a stop order that automatically adjusts its stop price as the market price moves, maintaining a fixed distance from the price to protect gains while allowing upside.
Example: An investor who holds 100 shares sets a trailing stop with a $2 trail; as the price rises from 20 to 25, the stop price moves from 18 to 23, and if the price then falls to 23, the order triggers to exit at the prevailing market price.
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