First and foremost, let’s make sure you know what a trailing stop is. In fact, even before that, let’s make sure you’ll actually use a trailing stop. Just tell yourself: “I will use trailing stop”. It’s that easy. But, all joking aside, trailing stop is a very important investment tool. Take it from us – you need it, and it’s there for your benefit.
What is a trailing stop? Let’s look at an example. Let’s say you buy a stock for £100, but you don’t want to keep it if its value drops by more than 10%. So if it falls to £90 (£100 minus 10%), you’ll want to sell it. However, you don’t want to have to be constantly checking the value, waiting to sell the stock manually if things go bad. It’d be great if there was a way to do it automatically. Well, there is. All you do is set a stop-loss order at 10% and go about your business. Orca will sell it for you straight away if the price drops to that level. Your risk is limited, and your investment is safe.
Locking value growth
Of course, you don’t want to see your stop loss level way down there at £90 when the value of your stock price flies up to £200. Nor do you want to have to reset your 10% safety net manually every time it goes up. You want it to follow the price upwards. No problem: just set the trailing stop on your transaction at 10% and go about your business. The Orca app will move your 10% stop loss level upwards every time your stock price rises. Your profit is locked, your value growth is secured. That’s the essence of the trailing stop. Now, to the guide.
Where to click
- So, you’ve chosen a stock. Great. You click on it and choose the number of shares you want to buy. They’re not unlimited: to the left of “Shares to Buy”, you’ll see small letters saying “Max. —” and a number telling you how many are currently available to buy. So, don’t lose the rag and smash your phone if you were planning to buy 1,000 shares of Rolls Royce and only 5 are available – that’s the market. Anyway, underneath that, you’ll see the Trailing Stop. On the right, it’ll say “Add trailing stop” in purple – tap that.
- Once you tap “Add trailing stop”, a pop-up window will appear at the bottom. This is where you set the percentage for your trailing stop. Enjoy sliding left and right and seeing that nice red line stop at the percentage you need. By default, Orca has set it to 10% – that’s roughly a midway point between volatile and stable stocks.
- Choose the percentage you want and tap the nice purple “Add trailing stop” button down below.
- Now that your trailing stop is set, it’s time to double-check your transaction specifications. The number of shares, fees, etc. – just to make sure you haven’t mistyped anything.
- All good? Go ahead and click the “Buy” button. Then wait for your order to be placed.
That’s it for the trailing stop. It’s very easy, isn’t it? But as easy as it is, we can’t emphasise enough the importance of the trailing stop for your investments. It keeps your risks limited, protects your investment growth, and most importantly, does it all automatically while you live your life. Feel like checking in and seeing it work? You can – just open the Orca app and see for yourself.
Get something for doing nothing
Do you like doing nothing? Orca gives you free shares for that. Just share your refcode with your friends, and sit back. When they register on the Orca app with your code, Orca will give you more shares of the best performers on the LSE.