Personal Finance & Money Asked by Hamza Arshad on July 22, 2020
If i understand this correct a trailing stop loss line can be put between the current market price and what you bought it for and your taking an L on the trade …etc…
but why is the opposite practically non existent on brokers
eg : you buy long and your making money £50+ in profit …but you are unsure whether its gonna go up more or not so instead of closing then and there you say ok …im fine with making £30 profit so you place a trailing take profit …and then the market price falls below that line and you close with £30 profit…instead of having to constantly look at your portfolio to check if your still making a profit.
ps you can only put take profit at above what the current market price is at any given time.
I think you misunderstand stop orders, if I understand your question right.
Stop Loss
order is "I bought for $20, if it goes below $18 sell". That's a "avoid losing too much money" order. It can be set at a point below, or above, the original sale point; if the stock is now $30 you could set it at $27, no problem.
Trailing Stop
order is "The current market price is $30, if it loses more than 10%, sell, and adjust this order up if the stock moves up." It locks in profits on a stock, basically. It adjusts with that current market price; it's used to do what you say in the question, attempts to lock in profits on a profitable long position that is relatively constantly growing.
Both can do what you're describing to some extent; the difference is in whether it automatically adjusts up or not. Don't be confused by the word "loss" here; it's a loss relative to the current moment, not a loss relative to your original purchase price.
If that's not what you're asking for, then please clarify the question. This Investopedia page explains limit sell orders.
Correct answer by Joe on July 22, 2020
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