As the stock price goes up, you can tell your broker to keep trailing it and sell only if it falls 10% from its highest price ever. At that point, the order gets converted to a market order. This strategy avoids unexpected nosedives in your portfolio.
To protect your investments you set up 10% trailing stop-loss orders.
If you want to learn check out the following resources:
- The Newbie Traders Guide to Investing Jargon
- Building the Perfect Portfolio Allocation – 5 Models to Follow
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