When placing a trailing stop on Schwab.com's trader device, it says that the trailing stop should be more than the stop loss order.
This confuses me. I thought trailing stops were meant to keep you safe from gaps by selling when the momentum is pushing your stock in the wrong direction. Ex: the stop loss order is set for $8, and you bought it at $10, but that day the stock dropped from $15 to $9. If you had a trailing stop of 5% I thought it would sell at $14.25, rather than waiting for your stop loss order to kick in at $8.
Am I wrong? or is Schwab?
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