trail stop limit thinkorswim This is a topic that many people are looking for. khurak.net is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, khurak.net would like to introduce to you What Is A Trailing Stop Loss & How To Use It! Day Trading For Beginners. Following along are instructions in the video below:
” s going on it s rigid with sexual solutions. So thank you guys again for for joining us for another helpful video. I do want to let you guys know the reason that i m making this video is due to one of our members of things even he asked for me to make a video based on the specific topic. If you guys want me to make any video.
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If you did not know that i do jump on one to one video calls already feel free to check it out so let s go ahead and jump on to you know what is a trailing stop so i do want to let you guys know that there is not a trailing stop order types available in every broker champion. If you get that are using. Robin hood might be like well what the heck. That s not under the list of my order.
Types within. The robin hood platform. Well that s simply because. Robin hood does not offer that specific order type td.
Ameritrade and fidelity both offer that order type. It s you know those two brokerage companies are ones that i m personally using i use td ameritrade thing for certain platform just to be able to see and view real time quotes and then i use fidelity for my actual executions. When it comes down to me buying and selling different stocks. And i know both of them do offer that specific feature.
So what is the trailing stop loss well i m going to i m going to explain to you in this video on how i ve been able to in a sense use it based on my experience. But in no way does this mean that this is the only way that you guys can use it again. You want to make sure you dedicate your own bd before you do anything again. We don t invest in what we don t understand we never invest based on anyone else s opinion and we always have a plan 1 trade so i hope you guys enjoyed today s video.
I m going to be explaining how a trailing stop to work so pretty much what a trailing stop is it allows you to not have a real limit on the amount of profit that you ve already made so what i mean by that is i think i should probably just jump into kind of like the animation. I m going to do it with like some pens and papers. I think it s going to be very easy. But hope it s easy to understand so i hope you guys enjoy alright jitters.
So a trilling cell. Block just to provide you kind of like a definition on what it is will allow you to automatically sell your position at a difference of where it peaked out at during market price. And the cushion you give it so the whole point of a trailing stop loss is where it ever it peaks out at like let s say you bought in down. Here.
At 60. And you know ten cents. So let s say you bought it at sixty fifty whatever okay so sixty fifty you ve already built this margin of profits to the market opens. And it hits highs of you know sixty three dollars and 32 cents.
Therefore because you already have a huge margin for profit or the decent margin of profit of 475. You don t want to give too much of that margin up. But because you know jd st. Still has the potential to trend back up to 70 you want to give it that cushion for it to move around without automatically selling your position.
And then you don t want to dedicate all that time to you know just continue watching the stock so again this is why people usually use this certain order type to to swing trade and acid. A trade usually if you re day trading. You re they re actively watching it and giving it that cushion and then once it breaks. The trend.
You could automatically sell what jds tea allows you to do is for a swing trade. You know long term for a series of days. It will allow it to give it that cushion for it to move around once you re already in the green. There for tea but in a 60 and fifty cent and once it breaks like at 64.
You already have this huge margin of profit that because you have such a huge margin of profit. You re willing to set a trailing stop loss at a difference of two dollars meaning that you will give wherever the price is at a 200 buy cushion for it to move around before it automatically sells your position therefore. There is no limit on where your you know position will automatically sell because you know you re giving it that cushion for it to continue moving up and down up two dollars from where it peaks out at and giving it a two dollar cushion to down before it can bounce back up before it sells and if it you know exceeds two dollars then it will sell your your position automatically at a market order. Meaning that automatically sell your position at whatever.
The market price is once it exceeds that two dollar different. So pretty much what a trillion stop loss allows you to do is it allows you to give you that cushion for it to trend up throughout a series of days without you having to follow the specific stock. So what s an approach that you can take when it comes down to using a trailing stop loss the whole point of a trailing stop block is to give it a cushion big enough for it to move around for it to hit its overall resistance. And then for you to sell a profit right so that s the overall point of a trailing stop loss to be able to give it that movement or that margin for it to move around without filling until it hits.
You know the resistant or you can you know cancel that trailing stop block and then put it in a limit order to sell at the resistance at 70 to identify what margin or what number for the trailing stop loss you have to set to make sure that you give it enough cushion to move around so today from lows to highs it moved around from lows of what is that sixty one dollars 61134342 down at if it drops below and it moved lower than two dollars from workpiece data. It would have automatically sold your. Position and you would have locked in profits from 6050 to you know wherever. It is that it s sold so that means that your margin or your trailing stop loss was too tight that it didn t give it that margin to move up and to continue into trend upward.
Therefore something that you need to identify is what s that what s the largest margin. Then it moves around within a day. Therefore that is the margin that you should set to give it that cushion to move around so today was a little bit over two dollars tomorrow. It might be one dollar and then the following day might be three dollars.
We ll understand that if you re trending and you are you re wanting to sell at 70. And you wanted to give it that margin to move around you have to give it the largest margin not sell automatically meaning that if the largest margin. Where it moves around within one day is three dollars then you have to give it a three dollar trailing stop loss margin. So it can move around within a three dollar margin.
And not you know sell at market price. And not tell your physicians. So the whole point of a trailing stop loss is to give it cushion to move around. But to automatically sell your position.
If it breaks that margin or that you know margin that you set that if it breaks that you know 2 margin or that 3 margin that it will automatically sell your position. I know that can be somewhat confusing. But again it the whole point of a trailing stop loss is to give it cushion to continue trending upward. All right yeah and i know that can be somewhat confusing.
But again just to kind of recap on what a trailing stop loss is it allows you to set a specific quarter type that if you re already up in green on a trade you can set a trailing stop loss to give it a cushion for it to continue moving up and down and continue its upward trend without you having to sell with a nortec and without you having to really watch it and then once it hits a certain point then you can remove that trailing stop loss and then sell out a limit order the reason that there s this like margin that you have to identify yourself. And that you have to set yourself to be successful is some stocks move around you know five cents to ten cents every day. And it s usually the margin that they make up if it breaks that ten set margin right it s breaks like 20 cents. Then it breaks that trend and then you re most likely going to want to sell your position.
So the whole point of a trailing stop loss is to identify the average. If not the greatest margin that it moved around within one day and then set that as your trailing stop loss because you want to make sure that you allow to give it that movement before you know you sell your position at market price. And then lock in those profits. You want to make sure that it s something that makes sense to you and that you lock in profits at wherever.
It is that you know you want to set. But a trailing stop loss can be extremely useful for someone that is swing trading and that you know identify the support and resistance and that s already green on the trade. But thinks that you know we can continue trending back up. Therefore.
So you set a trailing stop loss of a dollar and fifty cents. It will give it a dollar and fifty cent margin to move around therefore once it hits that overall resistance that you ve identified you can automatically sellout position. And it will allow you to at least have like an exit. You know point in case.
It breaks that one dollar and fifty cent trend. So again the whole point of a trailing stop loss is to allow allow your position. That s already in the green to have a cushion to move around and continue trending upward. But once it breaks that trend it will automatically sell your position or you know.
According to your plan want to hit that overall resistance that you ve identified then you can remove your trailing stop loss. Which is pretty much just a safety net to like at least capture some of the profits that you ve already made and then lock in those profits. So then you can remove that trailing stop loss set a limit order at overall resistance that you you know been working towards and then sell your position from you know kind of like jd sdgs. You have the support has 60 resistance at 70 a lot of people that are spring training that use a trailing stop loss and might give it a tune of 3 profit to the 300.
Margin for it to move around therefore you can successfully move around and have the proper margin to you know approach and end up achieving that 7 price one so there s no doesn t report that you can use it for day trading as well obviously you re going to want to keep those margins potentially a little bit tighter. If that makes sense to you. But just know that if you keep a tighter trailing stop then you might end up you know having your position filled a little bit quicker than others. But if you end up keeping a you know more open trailing stuff then you re also giving away more potential profit that you ve already made therefore you know it s however your approach may be so.
What the trailing stop loss you want to identify a margin for profit that s the stock you know usually experiences and then if it breaks that trend. Then automatically stall your position at the market price. So i hope this helped you guys out when it came down to explaining and elaborating a little bit more on what a trailing stop loss is again it is an order type that is available for certain brokerage companies not all of them. And it s something that i have successfully used when it comes down to swing trading and also day trading because if you identify the average margin of profit.
I m just average margin that a stocks usually you know moves up on an upward trend. Then you know you can set that as your trailing stop loss therefore since you re already in the green. You re you know at least giving you more cushion because you still think that there s more potential. But you re also making sure that all the sudden if it breaks that trend.
Then you lock in the profits that you ve already made again so a trailing stop loss based on what i use it for is once you are already in the green and you think that it still has more margin for profit. You send a trailing stop loss at the greatest margin that it moves within one day. Therefore giving it that margin to continue trending upwards and if it breaks that. Margin you know let s.
Say it s a 200. Margin. Then they will automatically sell your position and lock in the profits that you ve already made but the whole point of a trailing stop loss is to give it that proper margin or cushion to trend back up to the overall resistance well. Then you can cancel the trailing stop loss and that end up putting a limit order or a market order to sell your position at your desired sell point so something like jb st.
Buying it at 60 giving it a proper margin for it to trend up to you know 70 without having to automatically sell that position or locking profits when you know that there s still more potential profit to be made so i hope this video explains you guess what a trailing stop loss is do you guys have any questions. Please leave them down in the comments again. I do have a group. It s textbook solutions.
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Buds. And my personal are provided to you down below. Thank you again for everything that you guys do continue working hard continue following your dreams and let your passion be what drives your success like always guys let s make sure that we in the year under green note take care guys. mer goods like washing machines and stuff like nthat although they have recently sold off their appliances crowe yeah so aside from light bulbs.
I nthink might be their last real consumer facing product that they ve been doing as of late nbut you can almost name anything on the industrial side of things and ge probably has their nfingers in it somewhere lapera yeah airplanes healthcare crowe oil and gas lapera all sorts of things crowe all across the board lapera anyways back in 2013. Ge. Got designated nas. A sifi.
Which is a systematically important financial institution. Which i think tyler nsays as sci fi. Which i like crowe well. I m not a finance person so ni just assumed it was sci fi lapera.
I actually don t know which one is nright. I ve never heard anyone else say it besides me and maxfield crowe okay lapera. So maybe you re right and i ve just nbeen saying it wrong crowe. We ll find out lapera.
I m sure someone will write in and ntell us which. One of us is right laughs . So ge was labelled as a sifi in 2013 and. Nthat s a huge hassle if.
You re not a bank . And it s already a huge hassle for banks n. It s a huge hassle because it comes with a lot of expensive regulatory requirements nyou re required to have all of these capital bases and you have to do all these stress ntests. Which aren t cheap to do and it means that a lot of your capital is tied up in just in case nfinancing.
Just in case. You go belly up you can t because you have all this capital saved nup. So you can t which means for a company that s trying to innovate or do other things nthat isn t a bank. It s a problem because banks have to have that money they have deposits nand stuff anyway.
It s not a big deal for them it s part of their business model. But nfor ge. It doesn t really make a ton of sense crowe well if you look at the history of nge ge capital. More specifically you can almost see why this happened let s start npre financial crisis.
Ge capital had just become a massive massive component of the nentire business. If you look at 2007 their total net income their financial or capital nmarkets aspect of the business was anywhere between 40 to 50 of their entire business nand. This is somebody who makes almost everything so when you had that and even ceo. Jeff immelt.
Nhas said this over time is they got caught up in the numbers of profit on the capital nend. And didn t really focus on who they were as an industrial manufacturer. And i mean nif you look at some of the things that were on the ge capital balance sheet at the time nthey were doing private label credit cards for amazoncom. Walmart gap companies like nthat and just taking on a lot more of a role of na bank or financing company.
Just for the simple fact that the returns. Where there nrather than maybe using their captive finance aspect of their business. Purely for their nindustrial operations or whatever they re selling for so. When the collapse happened nthey had to get a 3 billion preferred share tarp esque buyout from warren buffett who ngave them a little bit of approval there it made them look in the mirror and say business and focus on what we do well as an nindustrial manufacturer.
Results of that where they ve spun off synchrony nfinancial. They ve sold what is it 30 billion worth of assets to wells fargo. You re a little nbetter with the numbers lapera yes 30 billion worth of commercial nlending leasing to wells fargo crowe. So on top of that and i believe it nsomewhere in the 150 160 billion range in terms of assets.
They ve been selling or deleveraging nfrom ge capital lapera right so about 115 billion asset nmanagement business they re in talks with state street which is already a sifi to nsell it to them. And that is relevant as of i believe friday or thursday of last week. Nwhich would have been february 4th. Just in case.
You re listening to this in july of 2017 n. Laughs so it s a great deal for state street. But it does make a lot of sense for ge. They re ngetting rid of a very expensive part of their business for them.
If you look at a little nchart that says. What made ge the most money in 2001. It was hands down ge capital. Now nit s somewhere like 5th on the list.
It s not making them nearly as much money as it nused to crowe and for good reason on top of the nsifi. However we want to call it designation. What it also does for somebody like an industrial nmanufacturer like ge it limits some of the shareholder. Things you can do or shareholder nreturn.
Things like buybacks dividend raises. Things like that that as you re an investor nin. The industrial space those are the things you re probably going to be looking for a nlittle. Bit more aggressively than say in the financial realm.
So with that designation nthey re being held back from a lot of things lapera. The reason for that is because like ni said. There s capital requirements for these companies they have to pass. These tests nand.
The federal government will basically tell them whether or not they re allowed to ngive out dividends and the federal government had said no to them in the past crowe. So far. Federal government has said nno to ge in that realm for the most part. The interesting thing now is since it s sold nof such a large component of its ge capital.
It s to the point. Where it maybe shouldn t nnecessarily be considered a systematically important financial institution. Anymore lapera and they did this on purpose. They nstraight up said first quarter crowe lapera.
Don t want it we re going to do as best. We ncan to sell off everything we have crowe yeah. And as a part of that they basically ntold shareholders. What they get out of it they re going to get 35 billion in stock nbuybacks.
Another 35 billion potentially in dividends so they re really trying to nthrow some large numbers out there to the shareholders and give them to the incentive n. Why soon enough because for ge to really. Unleash. Ntheir capital.
All that reserves built up not just in terms of returning to shareholders nbut even towards re investment in the actual business itself it really needs to happen nso hopefully this will be a lesson to ge and many others that you know it s nice nto have a financing arm. But it shouldn t be the biggest component of your business nif you re a manufacturer lapera right soon. We won t be able to talk nabout. Them on industry.
Focus financials at all crowe well let s hope not that s at least nmy opinion. I know everybody has their own investing opinions and things like that but ni like to think of a captive financing arm of an industrial manufacturer or any big thing nlike that it should never be talked about at least in my opinion. If i m listening to na quarterly earnings call or looking at some of the financial statements. It should almost nfeel like an afterstatement.
It s something there to smooth the skids when we re trying nto make some sales happen maybe it ll generate a modest return on it lapera you definitely don t want to see a nloss on it crowe well granted. But i don t want to nsee that the dominant component of the business in any way. Because it really as we ve seen nover these past 6 7. 8.
Years of that transformation of gm ge people like that that when it nbecomes such a large component of the business. It distracts from what a company does well nge by most rights probably didn t need to be into the private credit card business nthey just got enamored with it and now that it s not there hopefully they can focus on nwhat. They do best lapera right and that just in case. You re ncurious that private label credit card business got spun off with synchrony back in october nof 2015 crowe 2014 lapera oh 2014 so it s been gone for a nwhile crowe all for the better lapera.
All for the better just in case. You re nwondering by the way why tyler crowe is on the show with me today laughs this week nwe ve come up with a number crowe industry mashup lapera industry mashup the venn diagram nweek. I don t know one of us is going to appear on someone else s show all week. So ntomorrow.
I ll be on consumer goods get excited i. Have no idea what we re talking about yet n. Laughs crowe. Actually taylor muckerman was supposed nto be in here.
He s the other industrials analyst with us. Unfortunately he s a very nlarge. Carolina panthers fan lapera laughs. No crowe and he is nowhere to be seen so hopefully.
Nwe can find him someday lapera aw. If you re out there. Taylor. Feel.
Nbetter. Laughs. So yeah. Thank you guys so.
Much for joining us on industry. Focus. Nas. Always people on this program may have interests in the stocks they talk about and nthe motley fool may have formal recommendations for or against those stocks.
So don t buy nor sell anything based solely on what you hear thanks for joining us hope you have na great week. And don t forget to email us about your opinions on how sifi is pronounced nemail is industryfocus foolcom. ” ..
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