In yesterday’s sensationalist article I told you how I had closed several positions in an IG Index account in order to bank some profits. It was mighty unusual for me to close any position trades manually, instead preferring to let my trailed stop orders take me out when the tide turns. In one case it was lucky I close the trade manually, just in the nick of time.
This morning, Lamprell shares opened some 50% down, and even my stop order wouldn’t have saved me… unless it had been guaranteed. Not all spread betting companies offer guaranteed stop orders, but Capital Spreads, IG Index, InterTrader, SpreadEx and Spread Co do.
Note that although my timing was lucky in the extreme, my general intention was more skilful in the sense that I had closed those particular trades yesterday precisely because I was afraid that their stop orders were not guaranteed.
So my stop order didn’t need to save me, because, in this case — by sheer luck, I hasten to add — I had closed my position just in time the previous day. Phew! So this morning I got the chance to buy at a price of 73.94 a stock that I sold yesterday at 124.19. In a sense, I just sold high and then bought low without actually going short. My new position has a protective stop order attached, which is guaranteed (just in case) in those accounts that allow it.
A picture paints a thousand words, so here is one of those nice ETX Capital charts that has the option of showing currently-open trades and which demonstrates what just happened:
End-of-Session Update: By close-of-play, my new position in Lamprell had moved into profit and my guaranteed stop order had been trailed to slightly better than break-even. So the Lamprell cloud had a silver lining… for me 🙂
Disclaimer: this posting is for general education only; it is not trading advice.