| Trailing Stop Order |
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Information AboutTrailing Stop Order |
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A trailing stop loss is a slightly more complicated version of the Stop Loss Order in which the stop loss price is set at a fixed percentage or value below the market price. If the market price rises, the stop loss price rises proportionately, but if the share price falls, the stop loss price doesn't change. That method allows the investor to set a limit on the maximum possible loss without setting a limit on the maximum possible gain, and without requiring paying attention to their investment on an ongoing basis. A trailing stop limit is similar, but based upon the Stop Limit Order . With a trailing stop limit, once the price drops below the stop a limit order is executed with the limit price equal to the final stop price. The difference between the two is that the order executed with the trailing stop loss is a market order. If the share price continues to fall after the stop price is reached, but before the shares are sold, they can be sold at a lower price than the stop price. With a trailing stop limit the shares are will not be sold at less than the stop price (but with any limit order, it is possible that the limit price will never be reached.) |
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