trailing stop loss investment & finance definition

A stop-loss order placed at the time a stock is purchased that requires the stock to be sold if the price falls below a specified price level. The stop-loss price is set at a fixed percentage point below the market price. If the price increases, the stop-loss price rises proportionately. If the stock price falls, the stop-loss price doesn’t change. A stop-loss order allows investors to set a limit on the maximum possible loss without limiting potential gains or requiring a constant monitoring of the investment’s performance.