- Trailing stops
are used to protect the profit in a long or short position.
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- History
- Using trailing stops is not a new idea.
Traders have used trailing stops for years with some success.
In the past, the negative to using trailing stops was the need
to actively tend every trade and the tedious work involved moving
the stop as the price moved.
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- How trailing stops work
- Suppose you were to buy a stock at 55.6
as in the picture below. You would then set a 1/2 point stop
to sell it at 55.1, just in case your entry point judgment was
incorrect. Your judgment was right and the price moves up to
56.1. Your new stop would be set at 55.6. This means that if
the price retraces less than 1/2 point you will stay in the trade,
but if it should retrace a half point, a market order would be
sent in to sell the stock. Notice how the stop would need to
be moved up each time that JNPR made a new high. That is a lot
of moving the stop. This is what makes using trailing stops,
so time consuming and tedious.
- Modern methods
- Why not use a computer to do the work?
Guess what our Realtick 7 trading software has built into it!
Cha-ching! A trailing stop that is so easy to use that a 5 year
old could do it, but don't let your children trade your account
just yet.
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- How easy is it
- If you are using our Realtick 7 software,
it is easier than entering an order. In the picture below, you
enter a trailing stop by changing the order type to "trailing
stop" and entering in the trail amount, such as 1/2 point.
If you are trailing a long position, you would click sell. If
you wanted to trail a short position, you would click buy. How
simple is that!
- Benefits
- Besides the benefit listed above, you
can now go to the bathroom without being totally exposed. If
you have been trading for a while, you've probably been in the
position where you entered a position and because it is not doing
much, you figure you have a few minutes to go to the bathroom.
When you come back expecting everything to be about the same,
you notice your stock is tanking. The trailing stop not only
lets you go to the bathroom, it frees you from watching your
position, so you can trade more than one stock at a time. Is this fantastic or what?
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- At Princeton Daytrading, we use Realtick 7 and only Realtick 7. Realtick
7 is licensed by Townsend Analytics. We went right to the source
and contracted Townsend Analytics to be our execution firm. Townsend
Analytics is also a major player in Archipelago, the intelligent
routing ECN. When you trade with Princeton Daytrading, your trades
are handled with a highly integrated system designed to work
together in a seamless manner. That means few or no trade problems!
- If you notice an error in our newsletter, we would
appreciate your letting us know with an email
- One of our new traders exclaimed - trading without level 2 is
like trading with a blindfold on. How true that is! And having
level 2 is not much help unless you know how to use it effectively.
Our training is so good that we have had people fly into San
Diego from Ohio, Pennsylvania, Texas and even from London, England.
So, rather than losing money on that next lousy trade, invest
it in your education at Princeton
Daytrading where you can develop
your skills as you learn in the most effective and easiest way.
Remember, your money is counting on you!!!
- Education is
the key to success in any endeavor
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