does anybody regularly use trailing stops? How has it worked out for you? This is strongly recommended, especially for volatile times, but I personally don't know anyone who uses them. I have been tempted but to date have not utilized them either.
Regular use of trailing-stops is very risky. In case of sharp/sudden declines, or in a flash-crash, stops [regular or trailing] become market-orders and can be filled badly at much lower prices.
I do use them for short-term trading. For example, if I decided to sell a holding, I may enter a limit-sell [safer but it may miss] or a narrow trailing-stop. But these are for short-term and for specific situations.
I have most often heard that one ought to consider trailing stops, set at perhaps 15%, to protect potential profits from turning into losses in the event of a quick turn in the market. In this context, it sounds like one could use them even more for cases in which there have been considerable gains over a reasonable period of time that the investor does not want to see evaporate given the potential for a covid crash, for example. Do you think it wiser to let it ride in those circumstances, than protect most of the gain?
Only use stops on a daily basis. Rarely carry them over, a never carry them into a weekend. I also monitor them closely during the day and watch the volume as an indicator of the direction to where the stock may be headed.
Keep in mind that 15% trailing-stop may be filled at 20% or 30% or 50% below the high-water mark.
What happened in flash-crashes was that after terrible executions for stops, stocks rebounded quickly.
Another issue with them is visibility. Market-makers tend to hit nearby stops to clear the deck. Often, a stop is hit but stock turn right up.
Some might say to use stop-limit but that has its own complications.
I use them often, especially for shorter term trades and when something is running up quickly.
Right now, for CEFs such as DSL that I bought about one month ago (same for UTG). For CEFs, I typically use a 6% stop when they have run up quickly.
Yes, these can trigger in a mini crash. Also, you may sell lower than the stop, i.e. about 8% lower for me.
Still, I protected most of my gains. This worked well in March..