You could use this when you want to buy a stock after a dip, but only once it starts recovering - so you don't catch a falling knife.
Your stop price follows the stock price downward as it falls. If the stock rises by your trail amount from its lowest point, the stop is triggered.
Example:
TSLA is falling and currently at $200. You set a buy trailing stop with a $10 trail.
- TSLA drops to $180 - your stop sits at $190
- TSLA drops to $160 - your stop sits at $170
- TSLA bounces back to $170 - the trailing stop is triggered, and a market buy order is submitted
You waited for the bottom and got in on the recovery - automatically. Please note that the final purchase price may differ from $170 because the order executes at the best available market price.