Trailing stops are a type of stop-loss order where the trigger price adjusts dynamically with market movement, allowing traders to protect gains and manage risk while allowing profits to run. They automatically adjust the stop price at a specified percentage or dollar amount away from the current market price.
During extended trading hours, which occur outside regular market hours, the application of trailing stops can vary depending on the brokerage or trading platform. Not all platforms support trailing stops during these hours due to lower liquidity and higher volatility that can occur, potentially leading to more frequent, unintended stop triggers.
It’s essential to check with your specific trading platform to understand how they handle orders during these periods. Some platforms may require you to manually adjust your settings to allow for trailing stops during extended hours. Additionally, due to the erratic nature of after-hours trading, traders should be cautious about unexpected price movements that could prematurely trigger a trailing stop order.
For effective risk management, traders may prefer to avoid leaving trailing stop orders active during extended hours or use other protective strategies to safeguard their positions. It’s crucial to stay informed about the rules and functionalities provided by your broker to ensure your orders execute as intended.
No responses yet