what is a trailing stop-loss?

This is a discussion on what is a trailing stop-loss? within the First Steps forums, part of the Reception category; grubs50, I'm not sure if any SBs offer auto trailing stops (one's where their computer trails the stop for you), ...

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Old May 29, 2003, 2:03pm   #9
 
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grubs50,

I'm not sure if any SBs offer auto trailing stops (one's where their computer trails the stop for you), but you can do it manually with most (just by cancelling your old stop and putting in a new one). IB does auto trailing stops.

What Wideboy means by 'locking in profit' is that, in my first example above, the market went to 120 but you still lost 10 points (when it fell back to 90). But by having a trailing stop (in the second example) you have 'locked in' 10 points of profit so when the the market falls from 120 to 90 you actually still make 10 points of profit (cause you were stopped out at 110).

Hope that's clearer.
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Old May 29, 2003, 2:05pm   #10
 
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If the price goes in your favour after you enter a trade, and you move your stop loss to your actual entry level, then you can let the trade run and the worst that can happen is you will be stopped out for 0.
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Old May 29, 2003, 2:20pm   #11
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grubs50 started this thread thx mmillar and wideboy u have been very helpful...........it seems IGINDEX is the probably the most user-friendly of the SB companies from what i have read so far on this site but i don't understand why there seems to be a lot of ppl trading with D4F.........i mean spreadbetting
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Old May 29, 2003, 2:27pm   #12
 
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I think their spreads are fairly tight compared to others.
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Old May 29, 2003, 2:35pm   #13
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grubs50 started this thread but what is the point if they don't fill u at the price u want?
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Old May 29, 2003, 6:20pm   #14
 
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Here is another explanation

http://www.advfn.com/cmn/help/trailstop.php

you can set alerts here

http://www.advfn.com/cmn/trailstop.php
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Old Jun 12, 2003, 3:01pm   #15
 
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Good afternoon,

Well, here goes - my first post!

I am fairly new to trading, and have been trying to educate myself through research and seminars (One recently with Sr. Member NAZ - the Daytrading TA course - which was EXCELLENT, by the way)

Despite having done some paper trades, combined with some real trades, I am still not clear on how best to set my initial stops and then trailing stops.

There seems to be several approaches when setting the initial stop (before trailing):

1) Use 7-8% below price movement

2) Use a set amount of cash, determined by the size of your account. ex., Never lose more than £200 (on an account worth 10k)

3) Stick to a percentage (ex., 2% of your account)

Is one method more popular than any other?

If your stock moves up, would it be advisable to use that same % in most cases as your trailing stop, or should the stop be 'loosened' up after locking some profits?

The problem seems to be - especially on Nasdaq stocks, I will get myself stopped out too often with such tight stops.

I assume it has a lot to do with the size of one's trading account. Until I become more experienced, I will most likely swing trade (Nasdaq/NYSE) with an account of £10-15k, so my gut instinct is to set a stop goal so I never risk more than 2% on the initial trade.

Can anyone advise what approach might be best for me for both the initial stop and then the trailing stop?

Thanks!
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Old Jun 12, 2003, 5:13pm   #16
 
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Hi blyon

As usual there is no one answer.

A lot depends on what you're trading and also you're typical holding period in time.

Also your own pain threshold will come into it.

I day trade the Dow and find that 25pts is quite good, I also use the centre line of Bollinger Bands after a good run (assuming I make one)
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