# Trailing Stop. Trailing Stop Explained

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1 Trailing Stop Trailing Stop Explained Trailing Stop orders offer the advantage of providing protection against losses with an automatically executed order. Additionally, they may help the trader protect profits by raising the Stop price as the stock price increases.

3 EXAMPLE An investor purchased XYZ stock at \$12 and determined that he is comfortable with the possibility of losing \$2 per share. To minimize his losses, he fills out a trading order ticket to sell 100 shares of XYZ with the price type set to Trailing Stop \$ and a \$ Value at \$2. The Calculated Price is automatically generated at \$10 (\$12 stock price -\$2 trailing stop price). As he monitors the stock prices, he notices that it rises to \$15. The Trailing Stop price is now automatically adjusted to \$13 (\$15 stock price - \$2 trailing stop price). After several days, the stock price begins to dip. The Trailing Stop price will stay at \$13 as it only trails the stock price upwards in a sell order. When the stock price hits \$13, the order is activated because it meets the Trailing Stop price which then becomes a market order. Remember that the shares are not necessarily sold at \$13 because that is the point at which the order is only activated. The shares will be sold at market price (the best price currently available in the market) Stock Price rises to \$ New Stop Price: \$ Stock Price: \$12.00 Stop Price: \$10.00 *The above example is for educational purposes only and not to be interpreted as a recommendation. 3 Trailing Stop Scotia itrade

4 How To Set A Trailing Stop Order To set a Trailing Stop order on Scotia OnLine, begin by selecting your account. Fill in the trade ticket with the symbol, market, order type (sell), and quantity. Select price type and select Trailing Stop \$ for a fixed dollar amount (or Trailing Stop % for a fixed percentage) from the drop-down, then set the \$ Value ( % Value if using Trailing % ). The Calculated Price is automatically generated based on the number you entered. Select a day sometime in the next 30 days to keep your order open for a while. Come back on a regular basis to adjust the \$ Value (or % Value ) as the stock price moves up or down. Select Price Type: Trailing Stop \$ Set \$ Value Calculated Price will be generated automatically The Trailing Stop price (Calculated Price) will trail the stock price up (for sell orders) If stock hits Trailing Stop Trigger Price (Calculated Price) > order is activated; turns into a Market Order Security will be sold at the best price currently available in the market 4 Trailing Stop Scotia itrade

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