Like Financial Spreads and Capital Spreads, ETX Capital has introduced trailing stop orders to its CFD and spread betting accounts.
In a move that's estimated to be widely welcomed by the company's clients, ETX will now let clients place trailing stop orders.
Why Use a Trailing Stop Order?
These orders help clients lock in their potential profits when they are trading erratic markets.
This means that they can help investors manage their CFD and spread betting profits, as well as the many associated risks, more effectively.
Through a Trailing Stop Loss clients can 'trail a stop' behind an open position.
The use of a Trailing Stop keeps a stop loss at a specific percentage/point below or above the market.
A trailing stop loss isn't static, it will continuously change based on market fluctuations.
Trailing Stop Orders - Example
If an investor were to buy the FTSE 100 index at a 5934-5935 with a trailing stop distance, set by the client, of 25 points then the stop loss order will be placed at 5910. The trailing increment, set by ETX, would be 20 points.
If the FTSE 100 index were to then increase to 5974/5975 the stop loss would also move higher by 40 points to 5950 and it would continue to move higher for every 20 point move upwards.
If the market in question were to slump and it fell back to 5934/5935 then the trailing stop loss would have been activated and the trade would be closed at 5950.
Firms That Offer Trailing Stop Orders
The following spread betting companies let you apply a Trailing Stop to your trades:
'Trailing Stop Orders' edited by Jenna Cutly, updated 03-Jan-17
For related articles also see:
Guaranteed Stop Loss, updated 03-Jan-17
Guaranteed Stop Loss orders cost more than a normal Stop order but they also put an absolute limit on your downside. This quick review looks at the cost of the Guarantee, a worked example and... » read guide.
Stop Loss Orders, updated 03-Jan-17
Here we review the pros and cons of using a Stop Loss when you spread bet as well as other key FAQs. Stop Losses are normally good, low-cost risk management orders however they do have their limits... » read guide.
Hedging Using Financial Spread Betting, updated 03-Jan-17
Hedging is all about minimising your trading losses. Here we guide you through the basics and more complex ideas of hedging with spread bets & CFDs for the forex, commodities and stock markets... » read guide.
Risk Management with Spread Betting, updated 03-Jan-17
How to reduce your risk with spread betting and CFD trading, including using risk management orders like normal & Guaranteed Stops, Trailing Stops, Limit Orders and... » read guide.
Spread Betting, Leverage and Margin, updated 03-Jan-17
A quick look at leverage and margin. The spread betting companies let investors trade on margin. This leverage means investors don't need to put down large deposits, however it also means... » read feature.
About this page:
Trailing Stop Orders
A Trailing Stop Loss isn't static, it is a Stop Loss which stays at a certain percentage or points difference below or above the market. Trailing stop orders help spread betting investors lock in their potential profits when they... » read from top.