Capital spreads, one of the biggest spread gambling suppliers based in the UK, has just introduced a new tool for their clients to manage risk "trailing stops. Beginning today, clients can better protect their profits against adverse market moves.
Capital Spreads clients can now see the trailing stop feature within the market ticker. When opening a new trade, bellow the option to set stop and limit levels, there is a trailing stop box that may be ticked by the client. This could allow clients to better preserve any accumulated gains from unexpected adverse market moves.
A trailing stop basically adds life to a typical stop order. Rather than being fixed, the stop level will move with the market. This way, if a market moves positively though not adequately for the trader to take profits, the stop will also move in the same direction and will protect amassed profits or better limit possible losses.
An example helps clarify the way 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 favourably to 5,450. At this point, it could be smart to bump the stop a little higher, let's assume 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 automatically.
Each time the market moves a specific 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 actual characteristic is that a trailing stop will never return to a previous value. If FTSE returns to 5,400, the stop will remain at 5,310.
Capital Spreads clients can now see the trailing stop feature within the market ticker. When opening a new trade, bellow the option to set stop and limit levels, there is a trailing stop box that may be ticked by the client. This could allow clients to better preserve any accumulated gains from unexpected adverse market moves.
A trailing stop basically adds life to a typical stop order. Rather than being fixed, the stop level will move with the market. This way, if a market moves positively though not adequately for the trader to take profits, the stop will also move in the same direction and will protect amassed profits or better limit possible losses.
An example helps clarify the way 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 favourably to 5,450. At this point, it could be smart to bump the stop a little higher, let's assume 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 automatically.
Each time the market moves a specific 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 actual characteristic is that a trailing stop will never return to a previous value. If FTSE returns to 5,400, the stop will remain at 5,310.
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