Todays a good example...

..of why you need to have trailing stops in place! The FTSE dropped nearly 2% in todays trading session, and I saw no less than 10 of my positions in 'account 1' (pro share tips account) get stopped out. Some got stopped out for decent overall profits but some were also losing positions. I can't be too down about it though, the market has been kind to my accounts over the last few weeks and it couldn't and wouldn't continue like that forever.
In fact todays post was going to be about two positions that had that stopped out yesterday 'prematurely'. They had both risen fast during the day and come down just as fast towards the end of the days session and taken out both their trailing stops that I had in place on them. But overall their stock charts were showing both shares still in an overall uptrend so I was a bit gutted they had hit their trailing stops because in theory they still had some way to go... until today!
Funny how things turn out.
My post was going to be about the fact my default trailing stop on new positions is 2xATR (Average True Range). For those of you that are unsure, the ATR on a stock measures its volatility - this takes a stocks highs and lows over a set period based on values on an intraday, daily, weekly or monthly period. The default period is 14 but I lean more towards 10 and use it on daily graphs. This value therefore gives me an average of how much a stock has moved over the last 10 days. Usually the value doesnt change too dramatically if you increase the period from 10 to 14 anyway. So like I said, I tend to have my trailing stop setup as 2xATR on a stock, e.g. a stock at 100p may have an daily ATR of 6p, hence my default trailing stop (2xATR) will be at 88p when I first establish the position. *Phew*

Anyway my point being (yes there is one!) I noticed recently that sometimes when a stock gets some good news (like William Hill did yesterday) and the price suddenly spikes due to increased buying, the trailing stop of 2xATR doesnt seem to be enough when that buying action settles down and the price drops. i.e. the last few weeks of its average daily range just goes out the window! It doesnt really concern me when the price doesnt drop that same day because I manually check my stops most evenings and I can see positions that are close to stopping out - It is the stocks that drop that same day whilst I am not watching my positions that are sometimes getting stopped out unnecessarily because of a price spike. I may have to start looking at the daily biggest winners list at Yahoo Finance during my lunch hour just to check if one of my shares has suddenly skyrocketed in price. Then if needs be I can check that the ATR hasnt suddenly doubled in value.
So from being very dissapointed with those 2 positions being taken out prematurely last night, obviously I end up looking like a hero because the markets came down and both shares dropped today. Hence I banked my profits at exactly the right time... But it could have easily ended up going the other way and leaving me bitterly dissapointed. So if anyone has any suggestions on positioning stops other than multiplications of ATR then drop me a comment, I'd be interested at looking at this in a different way. Maybe even leaving a stop without a trail once its risen past 2xATR...
Anyway hold onto your trading seats because tomorrows market could be another bumpy ride!

BUY! BUY! BUY!

As you can probably guess I established a few more positions today. First lets get the boring stops from yesterday out of the way.
In account 1 MicroFocus stopped out @322.99 for a £4 loss.
In account 2 Punch Taverns stopped out @59.60 for a £15 loss and Mitchells & Butler stopped out @335.05 for a nice little profit of £38.75. Thats another example of the price spiking and then lowering quickly to take out my trailing stop too fast and its already ten points above that stop out price today. I really need to take a deeper look into my trailing stop strategy on these trades to see how I can avoid this from happening. Still, its nice to bank some monies for the account so the trailing stops are working to some extent, I just need to optimise them a little.

Onto todays trades then, firstly in account 1 I have established 6 new positions today based on share tips. These were:
Augean @26
Bellzone Mining @62.16
Blinkx @78.19 (this is a reopen of a closed position due to it being re-tipped in a different service)
Costain @218
Charles Stanley @275.69
Zincox @45

In account 2 I have re-established 3 positions at discounts from previous stops. These are:
McBride @169.3 - a 5% discount on the last stop out
Tribal @25.6 - a 23% discount on the last stop out
Trinity Mirror @74.9 - a 25% discount on the last stop out.
I also have a close eye on MicroFocus too. I know it just stopped out of the pro tips account but I already held it in my position trading account before and its currently at a 13% discount on its old stop out price. The fact it appeared as a share tip is an added bonus, but I feel it has a couple more % to drop first before I rebuy but we'll see.
Happy trading!

A few more stops: I guess the FTSE dropped whilst I was away!

Thanks to Tony for his comment yesterday. I did try replying to it via my mobile phone from my hotel room last night but the software just wouldn't let me for some reason. Anyway I'm home now, and I'm afraid to say my mistakes were made in the Position trading account Tony, sorry!
As for the 'Pro Tips' strategy, I wont be running it like the position trading account otherwise it would just be a slight variation on Tonys strategy. I will run it like I run my normal shares account, with slightly wider trailing stops and decent money management. I wont be pyramiding into any of the positions and occasionally I may cash a position in if it is doing particularly well just like my shares account - not that I'm having that problem at the moment!

Anyway Mondays trades went down like this:
All trades occured in Account 2, these were a stop of Mouchel @91.70 which got me a profit of 3.30, a new position in Wincanton @215.5 and a new position in RM PLC @150.10.
No activity in Account 1.

Tuesdays action:
In Account 1 three stops triggered, one in Blinx Plc @76.56 at a £2 loss, one in Centamin Egypt Ltd @173.06 at a £3 loss and one in Norseman Gold @68.33 for a £4.20 loss. I'm not sure why the stops for Blinx and Centamin were so close to my opening levels, my only guess is that they rose and my trailing stop rose slightly higher then they dropped and took me out very near to the buy levels but not quite break even. Ah well, that frees some money up for new trades tomorrow (Thurs.)

In Account 2 I established 5 new positions, these were:
Barratt Developments @76.6
William Hill @161.20
Kewill @96.2
Cable & Wireless @49.2
Grainger Trust @100.70

One stop was triggered, unfortunately another loss for the account but not a massive one - Robert Wiseman Dairies sold @315.3 for a £6.20 loss. One more for the stop list, and I guess I'm glad I dont have a real large holding after their recent bad share price action. Poor stockholders!

Anyway as I've just got back I doubt I will open any new trades today as I have other stuff to catch up on. I know I have got an email from IG index (account 1) about a stop that must have triggered but I will report on that tomorrow with any other action from the WorldSpreads account. (account 2)
Good luck with your own trades!

Woohoo! Profit!

Ok so this morning I received my usual midnight email from Worldspreads for Account 2 and after the last few days I presumed it would be another loss. To my surprise it was actually a nice trailing stop that had closed at a profit. Savills closed at 363.05 giving me a profit on the trade of £65.05, just what this account needed at the moment.
I also opened a new very small test position in Cairn Energy @379.20. This is one that had stopped out previous in an old account and the share has gone thru some tough times recently due to disappointing results in their Greenland explorations. This means I'm opening this position at a whopping 17.5% discount on my last position, a very big saving. We'll see how it goes.
No action on account 1 at all yesterday.
Tune in tomorrow for account figures updates, and hopefully you guys did OK during last weeks trading.