what is a trailing stop-loss?

Can anybody please explain in the most simplest of terms what a trailing stop loss is and how it is applied?

Hi,

It is described in the T2W Glossary here... http://www.trade2win.co.uk/boards/glossary.php?s=&ltr=T

As an example...

If you bought at 100, you would put a (fixed) stop loss at 90. If the market rose to, say, 120 then fell back to 90 you would get stopped out at 90 and lose 10 points.

If you bought at 100 and put a 10 point trailing stop loss in it would start at 90 but then each point the market went up the stop loss would move up with it - but if the market moves down the stop loss doesn't. So if the market went to 105 your stop would go to 95. If the market fell to 97 your stop would stay at 95. If the market then went to 120 your stop would rise to 110. If the market then fell to 110 or below you would get stopped out.

Obviously, reverse for going short.

The advantages are that you minimise losses and lock in profits. The disadvantages are that it is easy for a reversal to come back and knock out of the market before carrying on upwards.

HTH

Thx 4 the very clear and precise explanation. Can one use it for every trade and is it available with all SB companies?

I know that IG have just started allowing you to alter stops online during a trade.

how does it work with them (IGINDEX)?

You place your trade and enter a stop there and then.
Once the trade is open, all you need to do is click on the trade in the 'open trades' area and it allows you to enter a new stop level.
So as the price goes in your favour you can amend the stop if you like, to lock in some profits

I'm a bit of a novice so i still don't understand how one locks in profits doing this, so i will be most grateful if u can elaborate on this point. thx

I.G helpdesk No.= 0800 195 3400