#OrderTypes101

Trailing Stop Order:

Function: Dynamically locks in profits as the price moves favorably, while still protecting against downside (or upside for shorts).

Mechanism: The stop price is set at a fixed distance (dollar amount or percentage) below the current market price for a long position (or above for a short). As the market price rises (long), the stop price rises accordingly, maintaining the distance ("trailing"). If the price reverses and hits the trailing stop, it triggers a market order (or limit order - see below).

Types:

Trailing Stop Market

Triggers a Market