What is a Trailing Stop Loss Order?

There are two mistakes that most people routinely make. They let emotions play too big a role in their decision making and they fail to adequately plan for the worst case scenario before the worst case scenario actually happens. These two mistakes aren’t a big deal when you’re planning dinner, but they can be disastrous when it comes to investing in the stock market. Reacting emotionally to the market can lead to bad decisions, which is compounded by the fact that we react to worst case scenarios rather than plan for them!

Fortunately in investing, we can use some of the tools to protect ourselves against it. I’ve recently been reading more about it and one of the best ideas I’ve seen is the use of stop loss orders and trailing stop loss orders to your advantage.

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