Discover How You Can Use a CFD Trailing Stop Loss to Lock in Your Profits
Trading the markets for a living can be one of the most positively leveraged opportunities you may come across in your lifetime, especially when markets are heading in your direction.
Further to this some CFD brokers will allow you to run automated stops losses enabling you to leverage your time and effort even more.
What is a CFD Trailing Stop Loss (TSL)? A CFD stop loss is a stop that trails behind your position as it moves in your favor.
What are the different types of stops available? Most CFD brokers will allow you to place one or all of the following:
00.
Your AMP CFDs start to move in your favor and the price quickly jumps to $6.
60.
You might have implemented a $0.
20 automated TSL which means as AMP was rising your trailing stop continued to work 20 cents behind the current closing price.
With the CFD running at $6.
60 your trailing S.
L.
will be sitting at $6.
40 protecting your existing open profits.
Time to put your feet up, relax and plan your next round the world trip! What type of CFD brokers offer an automated trailing stop loss? With technology moving at incredible speed it is fairly common now for all most CFD brokers to offer an automated TSL with both Contracts for Difference, forex or even index CFDs.
Your major brokers will have it in place but always best to ask beforehand just in case.
Are there any pitfalls to using an automated CFD stop loss? Yes.
There can be a high chance of getting whipsawed in the trade and missing out on larger profits if and when the trade continues to move in your favor.
What you need to look out for here is where you are placing your stops.
Consider the fact that most of the top 200 ASX stocks move around 1.
5% - 3% per day then you can start to appreciate where you need to place your stop.
Another brilliant tool for staying away from intraday market movements is the Average True Range or ATR.
Run your stop loss 1.
5 - 2 ATR's away from the current price and you should be able to ride the trends when they come.
Further to this some CFD brokers will allow you to run automated stops losses enabling you to leverage your time and effort even more.
What is a CFD Trailing Stop Loss (TSL)? A CFD stop loss is a stop that trails behind your position as it moves in your favor.
What are the different types of stops available? Most CFD brokers will allow you to place one or all of the following:
- Trail your stop a certain % behind the current CFD price
- Trail your stoploss a certain $ amount behind the current CFD price
- Trail your stop loss so many pips behind the current Forex pair price
00.
Your AMP CFDs start to move in your favor and the price quickly jumps to $6.
60.
You might have implemented a $0.
20 automated TSL which means as AMP was rising your trailing stop continued to work 20 cents behind the current closing price.
With the CFD running at $6.
60 your trailing S.
L.
will be sitting at $6.
40 protecting your existing open profits.
Time to put your feet up, relax and plan your next round the world trip! What type of CFD brokers offer an automated trailing stop loss? With technology moving at incredible speed it is fairly common now for all most CFD brokers to offer an automated TSL with both Contracts for Difference, forex or even index CFDs.
Your major brokers will have it in place but always best to ask beforehand just in case.
Are there any pitfalls to using an automated CFD stop loss? Yes.
There can be a high chance of getting whipsawed in the trade and missing out on larger profits if and when the trade continues to move in your favor.
What you need to look out for here is where you are placing your stops.
Consider the fact that most of the top 200 ASX stocks move around 1.
5% - 3% per day then you can start to appreciate where you need to place your stop.
Another brilliant tool for staying away from intraday market movements is the Average True Range or ATR.
Run your stop loss 1.
5 - 2 ATR's away from the current price and you should be able to ride the trends when they come.