Trailing stop limit order


In a trailing stop limit order, you set three prices: your stop price, a trailing price, and a limit price. Your stop price is the maximum price you’ll pay when buying and the minimum price you’ll accept when selling. The trailing price is either a percentage or a dollar amount above your maximum stop price amount for buying and below your minimum stop price for selling. Adding the limit price ensures that your order will be processed as a limit order instead of a market order.

Example of a trailing stop limit order: if you place a trail stop limit order to buy ABC shares currently trading at $40 per share with a 10% trailing value and a $.20 limit offset, this will set the stop price at $42 [$40 (current price) + ($40*10% trailing)]. If the price of ABC shares increases to $42 per share, a limit order to buy the shares at $42.20 [$42 (stop price) + $0.20 offset] will be sent. If the price of ABC shares falls below $40 per share, the stop price will continuously adjust to be 10% greater than the current price. So, if the price of ABC shares falls to $30 per share, the stop price will then be set to $31.50 [$30 (current price) + $30*10% (trailing)].