Trailing stop example

A trailing stop order lets you track the best price of a stock before triggering a market order. Investors often use trailing stop orders to help limit their maximum possible loss.

With a trailing stop order, the trailing stop price follows, or trails, the best price of the stock by a trail that you specify. If the stocks price moves in a favorable direction, the trailing stop price will move with the stock. If the stocks price moves in an unfavorable direction, the trailing stop price will stay the same.

If the stocks price reaches the trailing stop price, a market order is triggered. The market order will be executed at the best price currently available.

Keep in mind, short-term fluctuations in a stocks price can trigger a trailing stop order. Also, you arent guaranteed a price with a trailing stop order. Also, not all stocks support market orders during extended hours. If the market is closed, the order will be queued for market open. Learn more by checking out Extended-Hours Trading.

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