Our new free Trailing Stops on Australian Shares allow you to track your profitable positions automatically – and close your trade should the market move against you.
This new type of Stop Order prevents you having to monitor and move your Stops constantly. You set the conditions for your Stop to move automatically, should the market move in your favour.
Let's see how it works...
When you open your position you specify two numbers:
- Stop distance – how far away from the opening level your Stop is placed
- Step size – the size of the increments by which the Stop can move
Say you buy an AMP contract at 723, choosing a Stop distance of 15 points and a Step size of 10 points.
The Stop initially sits 15 points behind your opening price, at 708. Immediately the price of AMP starts to rise, and the Bid reaches a level of 733 (10 points above your opening price). Your Stop 'steps' up by 10 points to 718 to re-establish a 15-point distance from the new market level.
The rally continues unabated over the next few days and AMP is now trading at 785/786. Your Stop has therefore moved automatically five more times, so you are now sitting on a healthy potential profit with your Stop waiting 17 points behind at 768.
A surprise news announcement causes the stock to retrace and within moments the price of AMP is back to 759/760. Your Trailing Stop has kicked in and your position is closed 17 points below the recent high – at 768, still well above your opening price of 723.
With a conventional Stop Order you would still be in the market, looking at a smaller paper profit. By contrast with a Trailing Stop you are able, in this scenario, to profit from a volatile market – and take a break from your computer too.
Our pre-recorded online seminar ‘Using Automatic Trailing Stop Orders' goes into more detail, click here to view now.
How to set up a Trailing Stop
Trailing Stops are free of charge. However, you will need to activate Trailing Stops for your account on PureDeal. To do this, simply:
- Go to Preferences (in My Account)
- Select 'Allow Trailing Stops'
- Accept the special terms and conditions
- Click 'Set Preferences'
You will now find a Trailing Stop check-box on your Deal Ticket for Australian shares and currencies, plus selected indices and commodities.
Other Trailing Stops available...
Not only do we offer Trailing Stops on Australian Share trades, they are also available on forex trades plus a selection of indices and commodities.
Trailing Stops can be added when placing a trade, or attached to open positions at a later stage. Please note they are not 'Guaranteed': like standard Stops they may be subject to 'slippage' in illiquid or fast-moving markets.
For more information please contact our dealers who will be happy to answer any questions.
The above comments do not constitute investment advice and IG Markets accepts no responsibility for any use that may be made of them.
24/09/2008