What
is
a
Trailing
Stop?
A
Trailing
Stop
protects
your
gain
in
a
position
and
will
automatically
close
when
the
stock
reaches
your
amount
or
percentage.
Imagine
you
purchased
100
shares
of
Caterpilar
at
$100.00
per
share;
the
current
price
is
$105.00
You
want
to
lock-in
at
least
$5
of
the
per
share
profit
you’ve
made
but
wish
to
continue
holding
the
stock,
hoping
to
benefit
from
any
further
increases.
To
meet
your
objective,
you
could
place
a
trailing
stop
order
with
a
stop
value
of
$2
per
share.
As
long
as
Caterpilar
keeps
going
up,
your
trailing
stop
will
increase
and
once
Caterpilar
drops
$2.00
from
its
peek,
the
trailing
stop
order
will
take
effect.
Trailing
Stop
will
not
protect
your
position
after
hours
or
pre-market.