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KB (FAQs) / MetaStock Products / MetaStock Professional / Tutorial / Advanced Features

How Do Trailing Stops Work?

How Do Trailing Stops Work?

The percentage you enter is the percentage of profits you are willing to risk. The trailing stop calculates the percentage using the amount of profit generated by the trade Only and closes the trade before it loses more than the specified percentage of the profit generated by the trade.� For example you might start a trade with $1000 equity and the trade might purchase 100 shares at 10.00 each to use all of the $1000 equity.� If the price of the stock changes to 11.00 your equity would increase from 1000 to 1100 and shows a $100 profit.� The trailing stop would try to keep you from losing this $100.� If the trailing stop is set to 5% this is 5% of the 100 or 5.00 instead of 5% of the $1100 or $55.00. In this example the trailing stop would close the trade if the price of the security were to drop from 11.00 to 10.95 showing a total loss of profit of more than 5.00.� If you do not want the trailing stop to close at 5.00 just increase the percentage to indicate the amount of your profits you want the trailing stop to protect for you.


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