Trailing Stop
Order Types
What it means
A stop order that automatically moves up as the price moves in your favor, but never moves back down. It locks in profit while limiting loss.
Example
You buy at $100 with a $5 trailing stop. Price rises to $120, so your stop trails up to $115. If price reverses, you exit near $115 with about $15 of profit locked in.
Mistake beginners make
Beginners set the trailing distance too tight, getting shaken out by normal noise before the real move happens. A $1 trail on a $5-average-true-range stock is asking to be stopped.
Related terms
- Stop-Loss — A pending order to close your position at a loss once price hits a set level. It caps how …
- Take-Profit — A pending order to close your position at a profit once price reaches a set level. It lock…