What is a Trailing stop order?
A Trailing Stop order is an order to buy or sell shares but only when the price is within a dynamic dealing band relative to the share's lowest/peak price.
If you are selling shares, your dealing band will trail upward movements in the share price thereby giving you the opportunity to lock-in a greater amount of profit.
If you are buying shares, your dealing band will trail downward movements in the share price thereby giving you the opportunity of buying at a lower price.
Trailing Stop orders are available on all LSE fully listed and AIM stocks.
A Trailing Stop order can be placed at any time and be monitored for up to a maximum of 30 business days.
When selling, you can enter a number of shares to be sold or select ‘Sell All'. If you select ‘Sell All' then your entire holding in the stock will be sold. This will take account of any shares added to/withdrawn from your account and/or orders dealt since your Trailing Stop order was placed.
When buying you will only be able to specify an amount of cash to be invested.
You will be required to specify your dealing band by entering, as a number of pence, a minimum and maximum trailing value. A maximum trailing value is optional. You can elect to receive an e-mail notification detailing the progress of your Trailing Stop order. Your dealing band is monitored, from when your order is placed until it is dealt or expires, in relation to the future lowest/peak price of the shares.
The aim of a Trailing Stop order, with a minimum trailing value only, is to secure execution, but only when the share price has moved from its lowest/peak price by the minimum trailing value specified by you. Additional protection over the price at which your order is dealt can be gained by specifying a maximum trailing value (optional).
The aim of a Trailing Stop order, with an optional maximum trailing value, is to secure price, but only when the share price has moved from its lowest/peak price by an amount equal to or greater than your minimum trailing value but less than or equal to your maximum trailing value, however execution is not assured.
In summary -- e.g. when selling stock -- the minimum trail value will sell when the share price falls a minimum of X pence per share from the highest selling price recorded after your order is accepted. If inputting a maximum trail value (optional), your order will not sell if the share price has fallen more than X pence per share from the highest selling price recorded after your order is accepted.