What is a trail stop limit order?

A trailing stop order is a stop or stop limit order in which the stop price is not a specific price. Instead, the stop price is either a defined percentage or dollar amount, above or below the current market price of the security (“trailing stop price”).

What is the difference between trail stop and stop limit?

A Trailing stop loss order creates a market order (close position at market price) when the trailing stop loss level is reached. On the other hand, a trailing stop limit order will send a limit order once the stop price is reached, meaning that the order will be filled only on the current limit level or better.

How do you do a trail stop loss in a limit order?

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….Example

  1. Step 1 – Enter a Trailing Stop Limit Sell Order.
  2. Step 2 – Order Transmitted.
  3. Step 3 – Market Rises.
  4. Step 4 – Market Price Falls.

Where should I set my trail stop?

If you’re going long (placing a buy trade), then the trailing stop needs to be placed below the market price. If you’re going short (selling), then your trailing stop-loss will be placed above the market price.

What is a trail stop?

A trailing stop is an order type designed to lock in profits or limit losses as a trade moves favorably. Trailing stops only move if the price moves favorably. Once it moves to lock in a profit or reduce a loss, it does not move back in the other direction.

How does trail stop work?

A sell trailing stop order sets the stop price at a fixed amount below the market price with an attached “trailing” amount. As the market price rises, the stop price rises by the trail amount, but if the stock price falls, the stop loss price doesn’t change, and a market order is submitted when the stop price is hit.