Capital spreads, one of the largest spread betting providers based in Great Britain, has just introduced a new tool for their clientele to control risk "trailing stops. Starting today, clients can better protect their profits against unfavourable market moves.
Capital Spreads clients can now see the trailing stop feature inside the market ticker. When opening a new trade, cry the choice to set stop and limit levels, there's a trailing stop box that can be ticked by the customer. This will permit clients to better preserve any amassed gains from sudden unfavourable market moves.
A trailing stop fundamentally adds life to a normal stop order. Rather than being fixed, the stop level will move with the market. This way, if a market moves favorably but not sufficiently for the trader to take profits, the stop will also move in the same direction and will protect amassed profits or better limit potential losses.
An example helps clarify how the trailing stop works. A trader opens a long position in the FTSE at 5,400 setting a stop at 5,300 and a limit at 5,500. The market moves favorably to 5,450. At this point, it could be sensible to bump the stop a little higher, let's say to 5,350. This way, there's still 100-points margin for FTSE to go down but the trader will avoid losing as much as at first set up. A trailing stop will do this mechanically.
Every time the market moves a particular number of points, the stop order is pushed in the same direction. If it is moved in 10 points increments, then when FTSE moves to 5,410, the stop moves to 5,310. One particular characteristic is that a trailing stop will never return to a prior value. If FTSE returns to 5,400, the stop will be kept at 5,310.
Capital Spreads clients can now see the trailing stop feature inside the market ticker. When opening a new trade, cry the choice to set stop and limit levels, there's a trailing stop box that can be ticked by the customer. This will permit clients to better preserve any amassed gains from sudden unfavourable market moves.
A trailing stop fundamentally adds life to a normal stop order. Rather than being fixed, the stop level will move with the market. This way, if a market moves favorably but not sufficiently for the trader to take profits, the stop will also move in the same direction and will protect amassed profits or better limit potential losses.
An example helps clarify how the trailing stop works. A trader opens a long position in the FTSE at 5,400 setting a stop at 5,300 and a limit at 5,500. The market moves favorably to 5,450. At this point, it could be sensible to bump the stop a little higher, let's say to 5,350. This way, there's still 100-points margin for FTSE to go down but the trader will avoid losing as much as at first set up. A trailing stop will do this mechanically.
Every time the market moves a particular number of points, the stop order is pushed in the same direction. If it is moved in 10 points increments, then when FTSE moves to 5,410, the stop moves to 5,310. One particular characteristic is that a trailing stop will never return to a prior value. If FTSE returns to 5,400, the stop will be kept at 5,310.
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