Trailing Stop-Loss

A trailing stop-loss automatically adjusts your stop price upward (for a long trade) as the security’s price increases. It allows you to lock in gains while giving the trade room to grow.

How It Works

You set a fixed dollar amount or percentage below the highest price reached. As the market price rises, the stop moves up with it. If the price reverses by the set amount, a sell order is triggered.

When to Use

• To protect profits in trending markets.
• When you want to let winners run while capping losses.

Limitations

• May trigger during short-term volatility (“stop hunting”).
• Not available in pre-market or after-hours sessions.

Disclaimer: For educational purposes only. This is not investment advice. Trading involves risk.