A trailing stop order is a type of stop order that moves with the price of a security. It is designed to protect profits or limit losses by automatically selling a security when it reaches a specified percentage below the current market price. The best percentage for a trailing stop order will vary depending on the individual investor’s risk tolerance and trading strategy.
Trailing stop orders can be an effective way to manage risk and protect profits. They can help to ensure that investors do not sell a security too early or hold on to it for too long. However, it is important to remember that trailing stop orders are not a guarantee against losses. They can still be triggered even if the price of a security does not decline significantly.
