Question

One advantage of a trailing stop order is that it locks in the current share price while still allowing for further gains on the position.

Question 17 options:

	True
	False

Answer 1

The option “True” is correct answer.

Trailing stop is more flexible than normal stop and its main advantage is that it allows shares to continue to rise in the direction to maximize the profit. In order to protect the capital, trailing stop will sell the stock automatically during remarkable declines in price. But this order does not put a cap on profits. Shares can continue to rise and keep invested as long as prices do not dip by the predetermined percentage.