Last updated: July 2026
Do you sell winning stocks too early and miss out on bigger returns? This post shows you how to avoid that mistake and maximize your gains by using a trailing stop loss.
You'll learn how this simple tool locks in profits while giving your winning stocks room to grow. You'll also discover why the biggest returns often come from a few great stocks and how to avoid emotional “quick sell” decisions.
If you want to protect your gains and let your investments reach their full potential, this article is for you.
A trailing stop loss is a sell rule set a fixed percentage below a stock’s highest price since you bought it. As the price rises the stop rises with it, locking in gains; if the price then falls by the set percentage — commonly 15–20% — from its peak, the position is sold. It lets winners keep running while capping how much of the gain you give back.
- A trailing stop of 15–20% is the common working range — wide enough to let a stock breathe, tight enough to protect gains.
- Stock returns are extremely concentrated: since 1926, just 4% of US-listed stocks account for the entire net wealth the market created above Treasury bills (Bessembinder, 2018).
- Only 86 companies produced half of that net wealth — letting a few winners run is where the money is made.
- Most stocks disappoint: over the full 1926–2016 period, 58% of US stocks failed to beat one-month Treasury bills over their lifetime — cutting winners early forfeits the rare ones that pay for the rest.
- A trailing stop removes the emotional “quick sell”: the rule, not your nerves, decides when to exit.
Ride Your Winners for Maximum Gains
When you’re sitting on a winning stock, the urge to sell and lock in those gains can be strong. But selling too soon could mean missing out on much larger returns.
Instead of cashing out quickly, let your winners keep working for you. Here’s how to get the most growth while still protecting your gains.
Use a Trailing Stop Loss to Lock in Gains
A trailing stop loss lets you hold onto winning stocks while limiting your downside.
Here’s how it works:
- Set a trailing stop loss around 15-20%.
- This rule only triggers a sale if the stock falls by that amount from its recent high.
- As the stock price rises, your stop loss moves up too, “locking in” gains.
This way, you stay invested as long as the stock keeps growing, without risking the profits you’ve made.
Trailing stop loss vs a fixed stop loss
A fixed stop loss sits at one price - say 15% below what you paid - and never moves, so it caps your initial loss but does nothing to protect a gain. A trailing stop loss ratchets upwards as the price rises, always staying 15-20% below the most recent high, so it locks in profit as the stock climbs. For riding winners, the trailing version is the one that matters: it keeps you in an advancing stock while steadily raising the floor under your gain.
Let the alert watch the stop for you
A trailing stop only works if you act on it, and watching every holding's high every day is the part most investors skip. The Quant Investing screener does it for you: set a trailing stop of 15% or 20% on any stock and it emails you when the price falls that far from its highest close since you set the alert — the trigger level ratchets up on its own as the stock climbs, so it can only move higher. You stay in the winner without watching the screen.
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Big Returns Often Come from a Few Great Stocks
You most likely seen this in your own portfolio already. Most of your big returns come from just a few standout stocks in your portfolio.
Holding on to these winners gives them time to reach their full potential. By letting your winners run, you’re allowing for long-term growth, which can be the real driver of your wealth.
With a trailing stop loss, you have a built-in rule to protect your gains, giving you the freedom to stay invested longer.
Avoid the “Quick Sell” Habit
Many investors make the mistake of selling too early, only to see the stock continue to rise. Selling after a small gain can limit your growth.
Instead, resist the urge for a quick sell and let a trailing stop loss take care of the risk. This keeps emotions in check and allows you to capture more of those gains.
How to Set Up Your Stop Loss
For most stocks, a 15-20% trailing stop loss works well. This range gives the stock room to move naturally without selling off too soon.
Adjust slightly if you’re dealing with a more volatile stock. The goal? Protect your gains while still allowing your winners to run.
What the research shows
The case for letting winners run is not a slogan - it is one of the most robust findings in the market research.
Hendrik Bessembinder, Arizona State University (2018). In Do Stocks Outperform Treasury Bills?, covering every US-listed stock from 1926 to 2016, he found that just 4% of stocks accounted for the entire net wealth the US market created above Treasury bills. Half of that wealth came from only 86 companies, and 58% of all stocks failed to beat one-month Treasury bills over their lifetime.
Crittenden and Wilcox, "The Capitalism Distribution" (US stocks, 1983-2007). Of the top 3,000 US stocks over 25 years, about 39% were unprofitable investments, roughly 64% underperformed the index, and a small minority of big winners produced all of the market's gains.
The lesson is the same in both: a handful of stocks carry a portfolio, and the biggest risk is selling one of them too early. A trailing stop is how you stay in the winner while still protecting the gain. These are market-wide averages over long periods, not a promise about any single stock; prices fluctuate and you can lose money.
| Study | Period | What it found | Figure |
|---|---|---|---|
| Bessembinder | 1926–2016 | US stocks behind all net wealth creation | 4% |
| Bessembinder | 1926–2016 | Companies producing half of net wealth | 86 |
| Bessembinder | 1926–2016 | Stocks that failed to beat 1-month T-bills over their life | 58% |
| Crittenden & Wilcox | 1983–2007 | US stocks that underperformed the index | ~64% |
| Crittenden & Wilcox | 1983–2007 | US stocks that lost money | ~39% |
Sources: Bessembinder (2018); Crittenden & Wilcox, The Capitalism Distribution. Market-wide figures over the stated periods, not individual picks.
Bottom Line
Bottom Line is to: Let your winners work for you.
A trailing stop loss helps you stay in control, protecting your gains while still giving you a shot at those big returns.
You picked a winning stock—now let it reach its full potential!
FREQUENTLY ASKED QUESTIONS
1. When should I sell a winning stock?
It’s tempting to sell a stock after it makes a nice gain, but selling too early could limit your return. Instead of selling right away, use a trailing stop loss. This way, the stock can keep going up while protecting your profits. For example, set a trailing stop at 15-20%. If the stock drops by that amount from its peak, you sell automatically.
2. What is a trailing stop loss, and how does it help me?
A trailing stop loss is a tool that locks in your gains while giving your stock room to grow. If the stock price rises, the stop loss moves up with it. But if the stock falls by a set percentage (e.g., 15-20%), it automatically sells. This way, you’re still in the game for the upside but protected on the downside.
3. Why should I “let my winners run”?
Because returns are extraordinarily concentrated. In a study of every US stock from 1926 to 2016, just 4% of stocks produced all of the market’s net wealth above Treasury bills, and half of it came from only 86 companies. Sell a winner too soon and you may cut off one of the rare stocks that carries the whole portfolio. A trailing stop of 15–20% lets you hold on while protecting the gain.
4. I feel nervous holding on to a stock after a big gain. How do I handle the fear of losing profits?
The fear of losing profits is normal, but a trailing stop loss can ease that fear. It acts as a safety net. If the stock falls below a certain percentage (like 15-20%), the system automatically sells it for you. This keeps your emotions in check and helps you focus on long-term gains instead of a quick profit.
5. What percentage should I set for my trailing stop loss?
For most stocks, a 15-20% trailing stop loss is a good range. It gives your stock enough room to move naturally without selling too early. If the stock is more volatile, you might adjust to a slightly wider range. The goal is to protect your profits while still allowing the stock to climb higher.
6. What if I sell too soon and the stock keeps going up?
Selling too soon is a common regret for investors. By using a trailing stop loss, you reduce the chances of this happening. The stop loss only sells when the stock drops by your set percentage, so you stay invested as long as the stock is climbing. This way, you avoid the "quick sell" mistake and capture more growth.
7. Why does selling winners too early hurt my long-term returns?
Over 1926–2016, 58% of US stocks failed to beat one-month Treasury bills over their lifetime — most of the gains came from a small minority of big winners. If you sell those early you forfeit the returns that were meant to pay for the losers. A trailing stop gives you the confidence to hold longer while still protecting the profit you have made.
Put your trailing stops on autopilot
You have the rule; the alert makes you follow it. Set a 15% or 20% trailing stop on each of your holdings and the screener emails you the moment one closes below its trailing level — so a winner keeps running while the rule, not your nerves, decides the exit. One thing to know: the alert tracks price only, so when a dividend-paying stock triggers one, subtract the dividend before you decide whether the stop has really been breached — it takes under a minute.
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