Help with Trailing stops for newbie with £1500 of profit

[silverpuma]

Hi all,

Last year I invested in RBS TW and PSN using my £22,000 savings. I use selftrade and due to a serious illness I left the trades to sit and drop with the result today my portfolio is worth £13,000 approx. I had no stop losses, just my head in the sand along with my illness.

But my TW, Taylor Wimpy shares that I bought for around 0.42p are now at 0.50.25p and I just checked I'm siting on a £1500 profit on these shares.

I don't want to lose again so I'm thinking of setting a trailing stop on my TW shares that would sell at Min price fall 5% and max price fall 10% and using the "immediate" option. This using their estimating would be a range of 47.7375 / 45.225. is this a good stragity? Basically I want to allow for the slight possibility of the shares going higher and follow my profits up (heres hoping!!) but still sell and make some profit if they dive.

I'm still learning so please be patient with me..............thanks

 

[Theodocious]

A trailing stop should trigger at one price. I don't know how min or max % helps, but you could also simply enter a sell stop order at 47.7375 (or 45.225) and achieve the same type of protection. The only benefit trailing the stop has is that it readjusts itself upwards automatically. I use TS's all the time when I have a profit and have to go to lunch. You certainly can use it for TW in my opinion.

Hope it helps!

Theo

 

[silverpuma]

Thanks Theo, I wonder could you or someother helpful posted look at the following info from the selftrade site: you can scroll down the page to the "TRAILING STOPS" section.....thanks!!

Start to track the peak price immediately 'Immediate' trailing stop example

Share price 100p; 'immediate' option chosen; 'top' price 5% below the peak price; 'bottom' price 15% below the peak price.

The price rises to 110p, then falls back over time to 85p: your order is triggered as soon as the price falls to between 5% (104.5p) and 15% (93.5p) from the peak of 110p. We would therefore sell your holding at 103p, locking-in a profit of 3p per share.

The price falls straight away to 94p, before sliding further: this is more than 5% below the peak (you bought at 100p) so your shares are sold, limiting your loss to 6p per share.

I'm confused, why when the price drops from the peak of 110 by 5% (104.5p) does selftrade sell at 103p . Why the 1.5p difference?

 

[trader_dante]

Hi all,

Last year I invested in RBS TW and PSN using my £22,000 savings. I use selftrade and due to a serious illness I left the trades to sit and drop with the result today my portfolio is worth £13,000 approx. I had no stop losses, just my head in the sand along with my illness.

But my TW, Taylor Wimpy shares that I bought for around 0.42p are now at 0.50.25p and I just checked I'm siting on a £1500 profit on these shares.

I don't want to lose again so I'm thinking of setting a trailing stop on my TW shares that would sell at Min price fall 5% and max price fall 10% and using the "immediate" option. This using their estimating would be a range of 47.7375 / 45.225. is this a good stragity? Basically I want to allow for the slight possibility of the shares going higher and follow my profits up (heres hoping!!) but still sell and make some profit if they dive.

I'm still learning so please be patient with me..............thanks

Read "How I Made $2 Million In The Stock Market" by Nicholas Darvas.

It will give you the profitable answer to your question.

 

[Theodocious]

.....I'm confused, why when the price drops from the peak of 110 by 5% (104.5p) does selftrade sell at 103p . Why the 1.5p difference?

======================
Seems like a typo. Their next example is exactly correct. It should be 104.5. However, it's not too inconceivable for a stop loss to be triggered at 104.5 and filled at 103 esp in a fast moving market.

HTH,
Theo

 

[Chorlton]

I don't want to lose again so I'm thinking of setting a trailing stop on my TW shares that would sell at Min price fall 5% and max price fall 10% and using the "immediate" option. This using their estimating would be a range of 47.7375 / 45.225. is this a good stragity? Basically I want to allow for the slight possibility of the shares going higher and follow my profits up (heres hoping!!) but still sell and make some profit if they dive.

I'm still learning so please be patient with me..............thanks

Ask yourself one question. How does a particular % drop in price (in your case 5-10%) relate to the characteristic movements of this particular share?

IMO Read and actually investigate Trader Dante's advice. You will be a much better investor in the future if you can understand the reasoniong behind it.

Chorlton