Trailing Stop Loss
A trailing stop loss allows an investor to set a loss limit (dollar or percent) on their stock. As the stock trends upwards the limit follows. Example: If you set a $1 trailing stop loss on a $5 stock and the stock drops to $4, it auto sells. If the stock moves to $6, the limit is $5. This a nifty option that protects your capital without constant monitoring.
This is handy for you lunch break investors. Say you go to lunch and have a nice burrito. You find the dream stock that is going to make you millions. You buy! Just in case, you set a stop loss at 8%. Now this awesome stock grows and grows. Then one day, bang! It’s not a hot stock any more. Your trailing stop loss kicks in and sells at 8% under the last “up” closing price. Now you made millions without trying. Or in some cases stopped your loses before you lost a bug chunk of change.
Use trailing stop loss to protect your capital and profits.
Tags: investing, profit, stock market, trailing stop loss
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