What is a trailing stop-loss 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. These orders continuously recalculate the stop-loss price at a fixed amount below the market price, based on the user-defined “trailing” amount. So as the stock price moves up, the stop-loss price will also move up maintaining the user-defined trailing amount.
For example, Mr. X bought shares @ ₹100. He places a trailing stop loss order @ ₹90 with a trailing gap of ₹10. If the stock price goes up to ₹105, the stop loss price will also recalculate itself to ₹ 95 maintain the trailing gap. So if the price moves further up to ₹130, the stop-loss price will become ₹120. But suppose the stock price starts falling to ₹125, the stop-loss price will remain @ ₹120. The trailing stop-loss orders will recalculate itself to maintain the trailing gap if the price moves in favour of the investor but will not recalculate in the event that the share price moves against the favour of the investor.
What is the effect of the trailing stop-loss order?
This order enables the investor to state the maximum possible loss without sacrificing the profits. Such orders help investors to lock in profits if the share price moves in their favour as the stop loss price will automatically recalculate to ...
Why doesn't FYERS offer trailing stop loss?
At FYERS, we prioritize effective risk management and transparency in our trading services, which is why we do not offer trailing stop loss orders. Here are the key reasons for this decision: Simplified Risk Management: Our primary focus is on aiding ...
What is a stop-loss order?
It is an order to exit an open position when it reaches a specified price. These orders are designed to limit the investor’s loss.
What is the stop-loss trigger price?
Stop-loss orders are designed in such a way that the order remains inactive until the last traded price reaches the limit order price. The stop-loss trigger price enables the user to define at what price the stop loss order should get activated. Once ...
How to modify the stop-loss?
In trading, stop-loss is one of the integral parts that help you in risk management. Generally, stop loss is placed along with the multi-legged orders such as Cover Orders and Bracket Orders. Once CO or BO is placed, you can easily modify the ...