A trailing stop is a modification of a typical stop limit order that can be set at a defined percentage or peso amount away from a security's current market price.
A trailing stop limit order is designed to allow an investor to specify a limit on the maximum possible loss, without setting a limit on the maximum possible gain. A sell trailing stop limit moves with the market price, and continually recalculates the stop trigger price at a fixed amount below the market price, based on the user-defined "trailing" amount. The limit order price is also continually recalculated based on the limit offset. As the market price rises, both the stop price and the limit price rise by the trail amount and limit offset respectively, but if the stock price falls, the stop price remains unchanged, and when the stop price is hit a limit order is submitted at the last calculated limit price.
How to set the stop and limit prices:
Stop price – The stop price is an offset from the last price of the security. It can be in distance offset (in peso terms) or in percentage terms.
Limit price – The limit price can also be in distance offset, percentage terms or an absolute value (actual price).
Example:
Here we used a stop price offset of 8% that will automatically adjust as the stock moves in your favor. We also used a Php 1.00 limit below the dynamic stop limit.