Trailing stop order

In a trailing stop order, you set a trailing price that follows the current market 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. It’s like setting a range. When the market price matches the trailing price condition, your order is processed as a market order.

Example of a trailing stop order: if you own ABC shares, which are trading at $80 per share, and you place a trailing-stop order to sell the shares for the trailing amount of $1.00 per share, a sell order will be processed (executed) when the price of ABC shares falls to $79.00 per share [$80 (bid price) - $1.00 (trailing)]. If the price of ABC shares rises to $82 per share and the order is still valid, the stop price will be set to $81.00 [$82 (current price) - $1.00 (trailing)].

Two things to know about trailing stop orders:

  • A trailing-stop order is triggered by the last trade, not the bid or the ask price
  • You cannot use trailing stop orders on Canadian exchanges