Trailing stop order Order (exchange)

an example of trailing stop order. top bottom, operator bought 100 units , placed trailing-stop order 10 ticks below buy price. in second plot time went , price went up, trailing stop went well, being placed 5 ticks below current market price. in last image price went down (not shown) , stop price reached, , order executed.

a trailing stop order entered stop parameter creates moving or trailing activation price, hence name. parameter entered percentage change or actual specific amount of rise (or fall) in security price. trailing stop sell orders used maximize , protect profit stock s price rises , limit losses when price falls.

for example, trader has bought stock abc @ $10.00 , places trailing stop sell order sell abc $1.00 trailing stop (10% of current price). sets stop price $9.00. after placing order, abc not exceed $10.00 , falls low of $9.01. trailing stop order not executed because abc has not fallen $1.00 $10.00. later, stock rises high of $15.00 resets stop price $13.50. falls $13.50 ($1.50 (10%) high of $15.00) , trailing stop sell order entered market order.