IG Index launches Trailing Stops
May 16, 2008admin No Comments »IG Index’s new trailing stops, press release follows -:
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 by late-afternoon 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.
Instruments covered
We offer Trailing Stops on currency trades, plus a selection of indices and commodities, including:
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.
Tags: IG Index, igindex, trailing stops
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