{"id":19023,"date":"2019-09-25T11:31:29","date_gmt":"2019-09-25T10:31:29","guid":{"rendered":"https:\/\/traders-paradise.com\/?p=19023"},"modified":"2021-10-12T11:45:02","modified_gmt":"2021-10-12T10:45:02","slug":"trailing-stop-loss-definition-and-examples","status":"publish","type":"post","link":"https:\/\/traders-paradise.com\/magazine\/2019\/09\/trailing-stop-loss-definition-and-examples\/","title":{"rendered":"Trailing Stop Loss Definition and Examples"},"content":{"rendered":"

3 min read<\/em><\/p>\n

\"Trailing<\/p>\n

The trailing stop loss may be practiced with stock, options, and futures exchanges that support regular stop-loss orders. <\/span>It is a variety of stop-loss order<\/a>. A trailing stop-loss order is executed when the price of the trading asset drops by the trailing value which can be expressed in percentage or currency amount.\u00a0<\/span><\/p>\n

For example, you might place a trailing stop order to sell your stock with a trailing stop loss of 4%. When the stock dropped 4% from its nearest high the trailing stop order will be executed.<\/span><\/p>\n

For example, assume that ABC stock is in its uptrend and hits $100 per share. If you placed a trailing stop loss of 4% it would be triggered when the price drops to $96 or below. Hence, your trailing stop loss at 96%, the sell order at $96 would be a market order. Instead, you can set a trailing stop limit which would provide you to gain a specified price placed in advance.<\/span><\/p>\n

Also, instead of placing percentages you may enter a trailing stop loss in currency. It is more favorable. Let’s do some math.<\/span><\/p>\n

Let’s say, ABC shares increase to $120, a $4 trailing stop would trigger at $116, which is a 3,3 % drop. If you entered a 4% trailing stop, it wouldn\u2019t trigger until the shares fell 4% to $115.<\/span>
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