Stock Market Investing With a Trailing Stop

Investing beginners need to understand many things before they purchase their first share of stock. The potential selling price, potential earnings, 52 week share price highs and lows, industry news, and competition are all topics that one should know before spending any money. It is easy to set up an account with a stock broker or get an online account. Most do not know how to protect and take the profits that they earn on stock shares. This is vital if you want to make money.

Blue chip stocks have large market capitalization amounts. This means that the amount of stock shares floating around the universe are infinite. It will take a lot of shares to be manipulated by one person. Most blue chip stocks are well established and have a higher price per share. Many may even pay out dividends to their share holders for profits received per quarter. If you decide to invest in a blue chip stock do you know when you can profit?

Any stock that you invest in will increase and decrease in price. It does not matter if it is a blue chip, penny stock or small company growth stock. The fluctuations vary based upon the price and profitability that the stock earns or expects to earn. To make sure that you do not lose any profits that your stock reaps, you can use a trailing stop to insulate your profits.

What exactly is a trailing stop? When you place an order for your stock you immediately place instructions as to when you would like to sell it. You dictate what that amount will be. You can use judgement based upon the highs and lows of your stock. If the average price movement goes up five to ten dollars each day you do not want to sell your stock before you have made any money. Make sure that you keep it low enough that should the price drop you still own the stock, but not too low that you do not make money.

As the price of your stock increases you want to change the trailing stop amount. This will help protect your profit should the stock have a price correction. You will be sold out and the cash will be in your stock account. Investing in stocks is not difficult. But it helps to use a trailing stop to insulate your profits.

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