Lock in your profits with a Trailing Stop
Our new Trailing Stops 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. Trailing Stops can be used on long or short trades, helping you to secure your gains as the market moves.
How does it work?
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 our Wall Street Cash contract at 12820/12824, choosing a Stop distance of 30 points and a Step size of 10 points.
The Stop initially sits 30 points behind your opening price, at 12794. Immediately Wall Street starts to rise. Very soon our sell price has risen to 12834 (10 points above your opening price) and your Stop 'steps' up by 10 points to 12804 to re-establish a 30-point distance from the new market level.
The rally continues and a few hours later the US blue-chip index is trading at 12889/12893. Your Stop has therefore moved automatically five more times, so you are now sitting on a healthy potential profit with your Stop waiting 35 points behind at 12854.
A surprise news announcement suddenly sends stocks plummeting and within minutes the index is trading back down at 12830/12834. Your Trailing Stop has kicked in and your position is closed 35 points below the recent high – at 12854, still well above your opening price of 12824.
With a conventional Stop Order you would still be in the market, looking at a relatively small 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.
Setting 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 currency trades, plus selected indices commodities.
Trailing Stops from IG Markets
We offer Trailing Stops on currency 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.
Updated: 28 April 2008