Our preferred type of Stop Loss is the Trailing Stop and the choices are the ‘set $ price’ stop or the ‘percentage’ stop. Of those we prefer the Percentage stop (%). First, let’s discuss the “fixed dollar trailing stop”. An investor buys a stock for $50 and puts in a “fixed dollar trailing stop loss order” at $40 or $10 below the purchase price. Over time the stock goes up to $100, the trailing stop will go up to $90 – still a $10 difference. If the stock happens to drop down to $95, the trailing stop will stay at $90 – only a $5 difference. Stops do Not move down unless the investor re-enters a new stop loss order! This is now at greater risk of stopping out since the stop loss is now so close to the stock price. Now let’s discuss the “trailing percentage stop loss”. Same scenario - $50 stock; a 20% “trailing percentage stop loss” is $10 and the stop order is set at $40; price goes up to $100, the percentage stop loss goes up to $80 – still a 20% difference. The fixed dollar trailing stop has a higher probability of stopping out and perhaps on a stop that you would not want to sell. This is why we like the “trailing percentage stop loss”! In either case the investor can always enter a new stop loss number or % and must do so every 90 days even to keep the original positions.