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A trailing stop is more flexible than a fixed stop-loss order, as it automatically tracks the stock's price direction and does not have to be manually reset like the fixed stop-loss.
A trailing stop limit order is designed to allow an investor to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain.
A trailing stop limit order is designed to safeguard profits by adjusting the stop price in response to market movements, allowing the stop to trail the market price by a specified amount or percentage.
A trailing stop order is a variation on a standard stop order that can help stock traders who want to potentially follow the trend while managing their exit strategy. Here we explain trailing stop orders, consider why, when, and how they might be used, and discuss their potential risks.
A trailing stop limit is an order you place with your broker. It places a limit on your loss so that you don’t sell too low. But, the “limit” refers also to the type of order placed with the broker.
How does a trailing stop limit order work, and when is it preferable? A trailing stop limit order sets a stop level, and once triggered, a limit order is sent. It is preferable when traders want more control over their trades but should be used cautiously, especially in fast-falling markets.
A trailing stop limit order allows you to set a trigger delta, which is how much the market price could fall before you’d want to sell, or rise before you’d want to buy. You can specify this as a percentage or a dollar amount.