How Do You Use A Trailing Stop Loss?
A trailing stop loss is used by stock and option traders to protect their profits or limit their losses. The trailing stop loss is set at a fixed percentage the trader chooses below the current market price. The advantage of the trailing stop loss over a regular stop loss is that the stop loss price changes in proportion to a rising stock price. If the stock price goes up, the trailing stop loss price also rises. If the stock price goes down, the trailing stop loss price remains the same. As a result, the trader can let his profits run and limit his losses without continually having to place new stop loss orders. Decide how you want to use a trailing stop loss. You may want to protect a profit in a stock after a good profit run. A trailing stop loss will lock in your profits. It will also limit your losses if the stock declines. Use the trailing stop loss as a way to plan a worst-case exit strategy that you can live with. Set the price for your trailing stop loss. This depends on the v
