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 follows your gains upward. You'll encounter this in your broker's order settings when you want to protect profits without babysitting your screen all day. It matters because it locks in wins while letting winners run—if a stock jumps 20%, your trailing stop rises with it, but if it drops 10% from that peak, you automatically sell. For example, you buy TradesCorp at $50 and set a 15% trailing stop; if it climbs to $60, your stop moves to $51, protecting most of your gain.