Trailing Stop

A trailing stop is an automatic sell order that moves up as your stock price rises, but stays fixed if the price falls. Think of it as a safety net that rises with your gains but protects you from sudden losses. You'll encounter this in your broker's order settings when you want to lock in profits without babysitting your screen all day. It matters because it removes emotion from selling—you set it once and let it work. For example, if you buy a stock at $50 and set a trailing stop of 10%, it sells automatically if the price drops to $45, but if the stock climbs to $60, your stop rises to $54, protecting your new gains. It's a practical tool for managing risk while staying invested.