Trailing Stop Maximize Profits Limit Losses Automatically

1089 reads · Last updated: January 14, 2026

A trailing stop is a modification of a typical stop order that can be set at a defined percentage or dollar amount away from a security's current market price. For a long position, an investor places a trailing stop loss below the current market price. For a short position, an investor places the trailing stop above the current market price.A trailing stop 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. The order closes the trade if the price changes direction by a specified percentage or dollar amount.A trailing stop is typically placed at the same time the initial trade is placed, although it may also be placed after the trade.

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