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The highest price a stock has reached since you set a trailing stop - the level the trail tracks.
Why It Matters
A trailing stop needs a reference point, and that point is the high-water mark - the peak price reached since the order was placed. The trigger sits a fixed distance below it. Each new high lifts the mark (and the trigger); pullbacks leave it unchanged. Understanding the high-water mark explains why a trailing stop only ever ratchets up: it's anchored to the best price seen so far, never to the current dip. The term comes from the flood marks left on a wall.
Key Points
- The peak price reached since the order was placed
- The trailing trigger stays a fixed distance below it
- New highs raise it; dips never lower it
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Trailing Stop Orders
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Related Terms
Common Questions
The highest price a stock has reached since you set a trailing stop - the level the trail tracks. A trailing stop needs a reference point, and that point is the high-water mark - the peak price reached since the order was placed. The trigger sits a fixed distance below it.
A trailing stop needs a reference point, and that point is the high-water mark - the peak price reached since the order was placed. The trigger sits a fixed distance below it. Each new high lifts the mark (and the trigger); pullbacks leave it unchanged. Understanding the high-water mark explains why a trailing stop only ever ratchets up: it's anchored to the best price seen so far, never to the current dip. The term comes from the flood marks left on a wall.
The peak price reached since the order was placed
The trailing trigger stays a fixed distance below it
New highs raise it; dips never lower it