Calculating a trailing stop order price
There are many strategies to trade stocks. One basic type of trade that many investors employ is the stop order. A stop order is an order placed by an investor to buy or sell a stock that executes whenever the market price reaches a certain point. Stop orders are useful to both prevent huge losses and protect gains.
In a typical stop order, the price does not change throughout the lifetime of the order. For instance, if you purchased a stock for $100 per share, you might want to set a stop order at $90 per share to limit your downside to 10%.
A more advanced strategy would be to continually modify the sale price of the stop order to track the value of the stock if it increases in value. This is called a trailing stop order. Concretely, if the same $100 stock increases to $120, then a trailing stop order 10% below the current market value would move the sale price to $108.
The trailing stop order never moves down and is always tied...
