Friday, April 25, 2008

Trailing Stop Orders

This week's dip in the share value of Timminco (TIM-T) triggered my long-standing buy order on Wednesday (see the April 23rd intraday chart below).

Unfortunately, the quick run-up soon thereafter was much faster than I ever thought possible and I cashed out way, way too early as my eager sell finger was not stuck in a meeting that morning.

If only I knew I had access to trailing stop orders!

As you can see from the 5-day chart below, the stock had a pretty wild week thanks to severe shorting pressure from the professionals.

Since I didn't want to lose my quickly earned cash on a volatile stock, I sold my shares to secure my profit but I could have used a trailing stop order to provide similar protection while leaving my position open to bigger gains.

It was an expensive lesson but is one that I think will revolutionize my trading style and hopefully, lead to bigger gains in future trades.

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