Trailing Stop Loss :-
A trailing stop loss allows traders to set a predetermined loss percentage that they can incur when trading on a financial instrument. It plays an efficient role in managing risks and providing profit protection. Consequently, these are also known as profit-protecting stops. When the price of a financial instrument rises or falls, the stop price moves up or down accordingly.
When an investor takes a long position, a stop price is set at a fixed distance below the market price of a financial instrument. It puts a cap on the amount of loss that a trader can suffer. But, they do not set a ceiling on the potential gain that can arise due to the increase in market price. Hence, it allows traders to take away profits until the market turns against them.
