Robbie Burns
Robbie Burns's columns :
21/11/2007Love the Shorts - but Short Term Only!
17/10/2007Oil be Blowed!
04/09/2007An August Of Panic
24/07/2007Trailing Stop-Losses >>
21/06/2007Should you follow Directors?
10/05/2007A Big Plus for ADVFN Level 2 - or is that Level 3
16/04/2007Murky May on the Way?
02/04/2007Time for an Easter Clean?
19/03/2007Rollercoaster Ride

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Robbie Burns – The Naked Trader

Robbie has been trading full-time since 2001. His book "The Naked Trader" (which also has useful information on how to use advfn) has become one of the biggest-selling finance books, reaching the top 150 books on Amazon - order it here. Trades made for Robbie's website have amassed profits of more than £300,000. You can read about his buys and sells daily at www.nakedtrader.co.uk.


Trailing Stop-Losses

24/07/2007

What do you do if you like to trade but have a full-time job so maybe can only look at your shares and take action once a day?

How can you make sure you exit at a profit?

Some investors use what they call ‘trailing stop losses'. This means that as the share you've bought into rises, so does your stop loss. It keeps rising as the share goes up and means your profit should get locked in. 

Some brokers are now offering to manage your trailing stop losses for you.

What does it mean?

Say you bought a share at 200p; you can set a trailing stop loss of say 20p. If the share goes to 180p, it gets sold and a loss taken. However if it goes up, the stop moves up 20p under the price.

For example the share goes to 260p, the stop is now 240p. If the share goes to 300p, the stop becomes 280p. So let's say the stock does go to 300p and then falls back to 280, the stock is sold for an 80p profit. In other words, your trailing stop takes a profit for you, removing the emotion out of any decision.

I think this is a marvellous idea especially for newer investors or those who can't be at a screen all day watching prices.

The broker will try and sell your shares once it hits your stop ensuring a profit is taken. In the end it's down to experience - and trial and error. Some brokers (Barclays certainly does) have demos of trailing stops on their websites so you can try it out.

As we head for August we seem to have avoided any massive market crash (so far!). August isn't such a bad month for shares.

One thing to look for is companies actually reporting in August. There aren't many but if you find one that produces a strong statement, you often find the share price responds very well on smaller volumes.

 

Also it is worth looking at companies reporting in early September - sometimes August is a good time to get in, in the run up to the results.

You can read Robbie’s daily market comments together with his latest buys and sells at his website www.nakedtrader.co.uk

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