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Trailing stop

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 26 Apr 2023

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Trailing Stop

A trailing stop is a type of stock order. 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. When the price changes direction and reaches the trailing stop level, the order is executed and the trade is closed. Trailing stops are used to lock in profits and limit losses, and can be used in both long and short positions.

History of Trailing Stop

The concept of a trailing stop was first introduced in the late 1980s. It was initially used by institutional investors to protect their portfolios from large losses. Over time, the concept of a trailing stop has become more widely used by individual investors as well. Today, trailing stops are used by investors of all levels to protect their investments and maximize their profits.

Comparison of Trailing Stop to Other Orders

Order Type Description
Market Order An order to buy or sell a security at the current market price.
Limit Order An order to buy or sell a security at a specified price or better.
Stop Order An order to buy or sell a security when the price reaches a specified level.
Trailing Stop Order An order to buy or sell a security when the price moves a specified amount from the current market price.

Summary

A trailing stop is a type of stock order that 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. When the price changes direction and reaches the trailing stop level, the order is executed and the trade is closed. Trailing stops are used to lock in profits and limit losses, and can be used in both long and short positions. For more information about trailing stops, investors can visit websites such as Investopedia, The Balance, and Yahoo Finance.

See Also

  • Market Order
  • Limit Order
  • Stop Order
  • Stop Loss Order
  • Take Profit Order
  • Market on Close Order
  • Good Till Cancelled Order
  • Fill or Kill Order
  • Immediate or Cancel Order
  • All or None Order

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