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How to manage the stops when a share is increasing in price?

Take Profit Stop Loss
Written by David

But how to manage the stop losses when a share has begun increasing in price?

In what manner do you like to move it up? Do you place it behind particular moving average lines or look for last support and place it there or some other method? Placing at support is nice, but when the price keeps rising and your support level is now more than 10% away then we’re giving away a lot if we leave it there and it retraces. Moving up 10% in general at all times behind the price also seems like a lot to give away, but we also have to manage not being stopped out on a closer stop due to random daily spike downs. Any tips?

What to do with stops in an open trade is a very good question and a very difficult one to answer. I guess it all boils down to how much of your unrealized profit you are ready to give back to the market. Too close and you might get whipsawed out or too far away and all your hard work and profit is evaporating before your eyes.

This is where looking at the chart is helpful in my opinion as to where support is and what might be a good place to put your stop. At present a lot of people use the latest low or just below which is fine But the markets do like to move things around and hunt for the most obvious places where people will most likely place them…

I tend to use a 2xATR (20 day setting) for my trailing stop if it makes it to breakeven. I will then keep looking at it on a Daily basis and move it up accordingly as the trade progresses. If I look at the chart and see resistance on it and the price begins to falter I might tighten the stop up a little closer or close out completely.

It is always best to always run your winning trades as far as you can to maximise your profits to help offset the inevitable losses.

But in all honesty there is no right or wrong way to trail a stop only what is best for yourself and your own temperament and that only comes with trial and error and a lot of hard work I’m afraid.

I believe it is a good idea to take lot’s of small trades to start of with (if they are trades to take of course)and to learn to trade before worrying about profits to much. Profits will come after you have learnt to pick good trades. All in my humble opinion of course.

About the author


I first cut my teeth in the Square Mile in the winter of 2002. I was young, fresh-faced and straight out of university; keen but maybe a little naïve about the way the investment world really worked… A few years ago I discover a whole new world of opportunity: spread betting on the financial markets.

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