A trailing stop-loss order is an order to buy or sell a security when it reaches a certain price. It is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in the investor's favor.
A trailing stop-loss order is a type of order that is used to protect profits and limit losses in a stock or other security. It is a type of stop-loss order that moves with the price of the security, allowing investors to lock in profits and limit losses without having to constantly monitor the security.
A trailing stop-loss order is placed with a broker and is set at a certain percentage or dollar amount below the current market price. As the security’s price moves up, the stop-loss order moves up with it, protecting any profits made. If the security’s price moves down, the stop-loss order remains at the same level, limiting any losses.
Trailing stop-loss orders are a great way to protect profits and limit losses without having to constantly monitor the security. They are especially useful for investors who are unable to monitor the security on a regular basis.
When placing a trailing stop-loss order, investors should consider the volatility of the security and the amount of risk they are willing to take. It is important to remember that the order will only be triggered if the security’s price falls below the stop-loss level.
In addition, investors should be aware that the order may be triggered if the security’s price moves too quickly, resulting in a loss. This is why it is important to set the stop-loss level at a reasonable level.
Overall, a trailing stop-loss order is a great way to protect profits and limit losses in a stock or other security. It is important to consider the volatility of the security and the amount of risk you are willing to take when placing the order.