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Index
Cover
by Tony LotonLegal
About the Author
Acknowledgements
Foreword
Preface
What the book covers
Who this book is for
How this book is structured
Terminology
Assumptions
Charts
Introduction
Taking the Emotion out of Trading
Why buy or sell at a less favourable price?
Part One: Stop Orders in Theory (the Tools)
1: Orders, Stop Orders and their Many Flavours
A Brief Introduction to Order Types
Stop Orders and Their Many Flavours
Why “Many Flavours” of Stop Orders?
Example Order Forms
The Long and Short of Stop Orders
A note about Dealing Charges and the Bid-Ask Spread
2: Stop Order to Sell
Who would use it, and why?
Analogy – the Safety Net
What do you need to specify?
When will it work?
When might it not work?
Stop Order to Sell for Value Investors
Not Limited to the FTSE 100 Index
Alternative Definition
3: Stop Order to Buy
Who would use it, and why?
What do you need to specify?
When will it work?
When might it not work?
Stop Order to Buy for Value Investors
Alternative Definition
4: Trailing Stop Order to Sell
Who would use it, and why?
Analogy
What do you need to specify?
When will it work?
When might it not work?
The Stop Gets Tighter as the Price Gets Higher
5: Trailing Stop Order to Buy
Who would use it, and why?
What do you need to specify?
Analogy – What was NOT, is now HOT!
When will it work?
When might it not work?
The Stop Gets Wider as the Price Gets Lower
6: Guaranteed Stop, and Stop with Limit
What is a Price Gap?
Guaranteed Stop
Stop with Limit
Guaranteed Stops and Price Slippage
About ‘Limit Profit’ Orders
7: Combining Stop Orders
Buy on Breakout / Sell if False
Buy Long or Sell Short
Buy Low / Sell High
All Together Now
Multiple Exits
Part Two: Stop Orders in Practice (the Techniques)
8: Trading Timescales
Stop Orders for Traders
Stop Orders for Investors
Stop Orders for Spread Bettors
Life Cycle of a Trade – from Entry to Exit
Which Financial Instruments Allow Stop Orders?
Mental / Manual Stops
What Kind of Trader are You?
Key Points
9: Price Gaps and Whipsaw Losses
What is a Price Gap, and When Does it Occur?
A Tale of Three Traders
Whipsaw Losses
Is the market out to get me?
Order Execution
Author’s Avoidance of Price Gaps and Whipsaw Losses
Key Points
10: Stop Placement
Stop Distances based on Fixed Percentages
Stop Distances based on Volatility
Stop Levels based on Support and Resistance
Trading Timescales
Money Management vs. Trading Characteristics
Not Just “Stopping Out”
Beware Dividends on Equity Positions
Beware Obvious Stop Levels
Don’t Forget The Spread!
Stop Placement for Long-Term Investors
Key Points
11: Position Sizing
Using Stop Orders and Position Sizing together
Using Stops to Increase Trading and Investment Funds
What is your Expectancy?
Determination of Stop Distances and Position Sizing
Key Points
12: Perfect Trades
Perfect Day Trade
Perfect Swing Trade
Perfect Position Trade
Perfect Investment
Author’s Perfect Trading Results
13: Imperfect Trades
Imperfect Day Trade
Imperfect Swing Trade
Imperfect Position Trade
Imperfect Investment
Author’s “Imperfect Trade” Example – Barclays Bank
14: When to Hold and When to Fold
When to Hold and When to Fold
Traders who know When to Hold and When to Fold
Taking Emotion out of Trading
Key Points
15: Top Tips for Using Stop Orders
16: Conclusion: The Case For and Against Stop Orders
The Case Against Stop Orders
The Case For Stop Orders
And finally...
Appendix
Stop Order Facilities by Broker
UK Spread Betting Firms
UK Stockbrokers
Recommended Reading
Other Books by Tony Loton
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