Trailing Stop

A trailing stop is an automatic sell order that moves up whenever 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 big losses. You'll see this option in most brokers' order types, and it's popular with traders who want to lock in profits without babysitting their screen all day. Here's how it works: if you own 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 automatically adjusts to $54, protecting more of your gain. It's a hands-off way to manage risk.