Re: Burrocrat's Account
![Quote](images/misc/quote_icon.png)
Originally Posted by
burrocrat
So I'm looking at using trailing stop orders, but it confuses me.
If I understand correctedly, they're meant to increase possible gains but limit losses off a top in an advancing market. But you have to set the sell price below the current price when you places the order? That sounds more like a limit losses, not increase gains scenario?
Anybody, can you explain how it really works in plain english? Ideally using recent ZSL as an example?
Okay, I'll try. Say you buy ZSL at $15 with a 2 point trailing stop. ZSL's initial TS would then be $13. ZSL moves to $16 so the TS moves to $14. ZSL moves clear up to $19, and TS is then $17. ZSL retraces back to $18, Ts is still $17, and if ZSL moves down one more dollar your stop will trigger and it will sell. You can also set the TS for a percentage rather than a price point differential. Clear as mud?
If you think education is expensive, try ignorance. - Derek Bok