Trailing Stop-loss, equally-weighted total portfolio performance. These orders are held in a separate order file with Fidelity and are not sent to the marketplace until the order conditions you’ve defined have been met. A trailing stop is simply a stop-loss order set a certain percentage below the market – and then adjusted as the price rises. The best way to explain it is with a couple of examples: You own 100 shares of stock ABC now trading at $50. A trailing stop sell order is used for long positions. The downside of using a trailing stop-loss is that markets don't always move in perfect flow. Or: If .DJI (Dow Jones Industrial Average) Last Trade is greater than 14,050 Or.IXIC (Nasdaq) Last Trade is greater than 2,850 then sell 250 shares ABC at a limit of $32.75. Click image to enlarge. Some brokerage firms, like Fidelity, offer trailing stop alerts with their accounts. Trailing Stop: A trailing stop is a stop order that can be set at a defined percentage away from a security's current market price. Traditional stop-loss strategy - not trailing . You can track up to 50 stocks at a time. But they generally expire after 30 or 60 days. TradeStops information never expires and even offers a 30-day risk-free trial. Trailing stops use a dynamic process that follows the price: You raise the stop as the trade makes profits. Under normal market conditions, I even put trailing stop orders at 2% or some small $ amount since there's rarely a large drop on normal days. Then: If stock ABC reaches a new 52-week high Then has a Last Trade greater than $37 then buy 250 shares ABC at trailing stop of 1%. The trailing stop-loss helps prevent a winning trade from turning into a loser—or at least reduces the amount of the loss if a trade doesn't work out. However, I have 2-3 points of caution: Trailing stop loss and trailing stop limits definitely help under normal market conditions because a 5% drop is significant. The result of using a 15% and 20% trailing stop loss levels give you about the same overall result with the 20% stop-loss level leading to higher returns most of the time. Trailing stop orders definitely help to protect your assets and really help most of the time. A trailing stop is set on a money basis — you maintain the loss you can tolerate at a constant dollar amount or percentage basis. It helps limit your losses in a falling market but still maximize and protect your profits in a rising market. Trailing Stop Sell Order.

Trailing Stop Loss A Trailing Stop Loss order adjusts in price with favorable market movement on the security.