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InvestmentMAGE's Blog : What Does Trailing Stop Mean?

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August 4, 2010

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Trailing Stop

What Does Trailing Stop Mean?
A stop-loss order set at a percentage level below the market price - for a long position. The trailing stop price is adjusted as the price fluctuates. The trailing stop order can be placed as a trailing stop limit order, or a trailing stop market order.

Also known as a Trailing Stop Order.

Investopedia explains Trailing Stop

This is such a useful tool, yet many fail to use it. Using a trailing stop allows you to let profits run while cutting losses at the same time.

Good Trading,

MAGE

Tags : TRAILING STOP STOP LOSS MAGE INVESTMENTMAGE STOP ORDER TRAILING STOP ORDER EXIT STRATEGY INVESTOPEDIA

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uwpltre

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August 4, 2010 21:44 Abuse this post

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For it to be effective, do you require a minimum of price x volume?
Do you use mental stops ever?

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InvestmentMAGE Date

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August 5, 2010 12:07 Abuse this post

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Hello uwpltre,

That's a great question.
I don't look at price or volume.
As a rule of thumb, I use an 8% trailing stop to protect me from rapid drops. (The market always seems to down a lot faster than it goes up)

I'm looking for a measure of a stocks volatility to refine this.

Perhaps someone reading this has some ideas?

For mental stops, I use the 'cheat sheet' at:

www.barchart.com

to identify the support and resistance pivot points.

hope this helps,

MAGE

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