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This is what was posted on investools.
How does a Trailing Stop Loss Work?
Posted: Jul 7, 2006 12:48 PM Reply
If I set a trailing stop loss on a stock that is 3% below stock price, does the stop reset itself each night, even when the stock goes down (assuming a long position)? Or does it stay put on down days and move higher on up days?
If it moves each night, then it is only a protection against intra day moves, and would still require a hard mental stop at some point, correct?
Brent Moors
Posts: 380
Registered: 7/8/06
Re: How does a Trailing Stop Loss Work?
Posted: Jul 7, 2006 2:48 PM in response to: Eric Haiss Reply
The trailing stop works off of the high price. If your stock is at $10 and you have a 5% trailing stop, it would trigger the order at $9.50, regardless of what day it occurs on. If the stock then moves up to $11 an hour (or day) later, the trailing stop would move up along with it to %5 below the high.
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