What are the benefits of using trailing stop-loss orders in trading?

What are the benefits of using trailing stop-loss orders in trading?

Trailing stop-loss orders help protect profits by automatically adjusting the stop price as the market price moves.

How do they differ from regular stop-loss orders?

Unlike regular stop-loss orders, which remain fixed, trailing stop-loss orders move with the market, locking in gains.

Can you give me an example of how a trailing stop-loss works?

Sure! If you buy a stock at $50 and set a trailing stop-loss at $5, it will adjust to $45 if the stock rises to $55.

Are there any risks associated with using trailing stop-loss orders?

Yes, if the market is volatile, a trailing stop-loss might trigger prematurely, causing you to exit a position too early.