TrailingStopAufträge

TrailingStopAufträge, also known as trailing stop orders, are a type of order used in financial trading to help manage risk and lock in profits. They are designed to automatically adjust the stop price as the market price moves favorably for the trader. A trailing stop order is set at a specific distance, either a percentage or a fixed amount, below the market price for a long position or above the market price for a short position.

If the market price moves in the direction of the trade, the trailing stop price moves along with it, maintaining the specified distance. For instance, if a trader buys a stock at $100 and sets a trailing stop loss of $5, the initial stop price would be $95. If the stock price rises to $110, the trailing stop price would automatically adjust to $105. However, if the stock price falls, the trailing stop price remains at its highest point, $95 in this example.

The order is triggered and becomes a market order if the market price moves against the trader and reaches the trailing stop price. This execution mechanism aims to limit potential losses if the price reverses after a favorable move. Conversely, if the price continues to move favorably, the trailing stop allows the trade to remain open, capturing further gains while still providing a safety net.

Trailing stop orders are a versatile tool for both short-term and long-term traders. They can be used to protect existing profits, limit downside risk on new positions, or even to initiate trades when a certain price movement is achieved. The effectiveness of a trailing stop order depends on the chosen trailing distance and the volatility of the underlying asset.