what is trailing stop loss?

A trailing stop loss is a type of order that is placed with a brokerage to sell a security when it drops to a certain percentage or dollar amount below its highest price. This is designed to limit an investor's loss on a security position while giving the security the potential to still increase in value. The trailing aspect of the stop loss order means that if the price of the security increases, the stop loss price will also increase, thus giving the security more room to potentially increase in value before a sale is triggered.