The advanced trading functions of our dealing platform include a range of 'Limit' and 'Stop' orders that enable you to gain greater control over your trading.

Valid for up to 90 days, we'll continually monitor share prices during market hours and carry out your order only where your specified price conditions can be met or improved upon. Used properly, these advanced dealing capabilities can form an essential part of your trading and portfolio management.

Orders may be placed online or over the telephone and can be cancelled at any point prior to expiry or execution. You can place any number of orders, so long as you hold sufficient funds in your account to meet the cost of purchase orders, or hold sufficient stock for sale orders at the point at which your limit order can be fulfilled. Where you do not have sufficient cash or stock, as appropriate, your order will be cancelled in full; partial execution is not available.

Markets can be volatile - certain factors might cause the bid-offer spread of a share to increase, even momentarily, to an unrealistically wide level, thereby causing your stop or limit order to trigger.

News, for example, can change sentiment on a company very quickly. And trading performance in other markets around the world whilst the UK market is closed can mean that a share price moves around more than usual, or the bid/offer spread may be wider than usual as the market opens (08:00) each trading day, only to settle down to more normal levels later on. To counter this latter trait, Stop orders are only enabled from 08.10 each trading day, whilst Limit orders can trigger shortly after market opening. Prices can also be volatile around closing time (16:30).

Equally, shares do not always open for trading at the same point at which they closed the previous day (this is known as 'gapping').

These untypical prices may, nevertheless, be the "best price" for that security at that time.

These wider spreads or fluctuating prices can cause a limit or stop order to be triggered sooner than you had expected. It is important, therefore, that you understand how such order types work and the implications and risks of using them. Please be sure to read the risk warnings and Terms of Business.

Equally, consider carefully where you place your price limits or percentage margins. Shares such as those in the FTSE100 index will typically have a bid/offer spread of, say, 0.5 - 1%, whereas small cap shares, such as those on the AIM market can have spreads as wide as 30%. Typically the less liquid a share, the wider its bid/offer spread.

Price fluctuations can be just as wide on different markets too: again we typically find that large cap shares are less volatile than small caps. It can be useful to look at the share price chart over time, and at the high and low price for the year, to help you set your price parameters.

Our order executions processes provide a degree of protection against extreme 'price spikes' by ensuring that a price persists for a minimum length of time or forms part of a trend before attempting to execute a Stop order based on that level. Equally we'll prevent stop loss orders from executing if the best bid and offer spread exceeds a certain percentage. This percentage varies depending on the unit price of the stock and is higher for low priced stocks than for those with high prices.

We will endeavour to continue to monitor the order until it meets all trade execution criteria or until it expires.

Limit orders are used to place buy orders in anticipation of a price fall to levels where you might consider a particular company good value, and sell orders in anticipation of a price rise where you might consider it to be fully valued or at a level where you are happy to take a profit.

When placing a limit order, you set the exact price at which you want the order to be triggered.

Example

With stop orders, you set two prices:

for a stop loss order - a trigger price and a bottom price, both expressed as specific values, or with the bottom price as a percentage of the trigger price.

Example

For a stop buy order - trigger price and a top price, both expressed as specific values, or with the top price as a percentage of the trigger price.

Example

In both of the above examples, therefore, had the share price moved straight to below (stop loss order) or above (stop buy order) the green line, the order would not have been triggered until it had returned back within the trading range you had selected.

• Start to track the peak price immediately 'Immediate' trailing stop example

  Share price 100p; 'immediate' option chosen; 'top' price 5% below the peak price; 'bottom' price 15% below the peak price.

  The price rises to 110p, then falls back over time to 85p: your order is triggered as soon as the price falls to between 5% (104.5p) and 15% (93.5p) from the peak of 110p. We would therefore sell your holding at 103p, locking-in a profit of 3p per share.

  The price falls straight away to 94p, before sliding further: this is more than 5% below the peak (you bought at 100p) so your shares are sold, limiting your loss to 6p per share.

  

• Set an activation price (as a specific value in pence) plus a top and bottom trading range, expressed as a percentage fall from the activation price. Activation price example

  Share price 100p; activation price 120p; 'top' price 5% below the peak; 'bottom' price 15% below the peak. The share price rises above 120p and hence the trailing stop starts to be monitored.

  If the price then rises to 150p,but then starts to fall back from that peak, your order will be triggered if the drops to 142.5p (5% below 150p).

  If the price only gets to 119p. i.e. it doesn't reach your trigger price, the order will not be triggered and will not be monitored. To protect against this when using the target price / target margin option, add a stop-loss order as well.

  

• Set an activation profit (as a percentage of your book cost) that you want to achieve before the trailing stop order is activated. Once again you'd set a top and bottom trading range, as percentages of the peak price)
  Activation profit example

  You hold 1000 shares which you purchased for a total cost of £500. When you reach a profit of 100% you want to start monitoring the price with a view to selling all or part of your holding should the share price then fall by between 5% and 15%.

  We will calculate the order values based on these parameters and set an activation price of 100p (Average purchase price of £500/100 shares = 50p per share. Activation profit of 100% = 50p per share. Average purchase price plus activation profit per share = 100p).

  The share price rises above 100p and hence the trailing stop starts to be monitored.  At this point the activation profit trailing stop order then operates in the same way as the activation price example above.

  If the price doesn’t get to your activation profit level (in this example 100p) your order will not be activated.  You should therefore consider protecting against any price fall by adding a separate stop-loss order.

The purpose of setting 'top' and 'bottom' prices is to ensure your order does not trigger simply as a result of normal intraday price movements. The 'top' price determines how far you are happy for the price to fall back from its peak before the limit is triggered. And the 'bottom' price set a trading floor - if the price drops immediately to below that level your order would not be actioned.

Once you have set your trailing stop order you can view the details in 'open orders'. Here you will see the peak price achieved since setting the order: this can help you to monitor the potential of your order reaching your activation price or activation profit level.

Remember, when using either the activation price or activation profit options, if the share price does not rise to your activation level you trailing stop order will not be 'live' and hence you will not be protected against price falls. You may want to consider, therefore, adding a separate 'stop loss' order at a point at which you would sell in any event.

You can place limit and stop orders by phone and online, in just the same way as placing an 'at best' order.

Having entered details of the shares you wish to buy or sell, select the order type and enter your price parameters and monitoring period.

Use the 'Estimated Trade details' to see how your order would work out in practice should your price parameters be met, then click the 'place order' button or cancel, as appropriate.

You can then review and amend your order at any point prior to execution or expiry by viewing your open orders.

Once the order executes, or if it can not be completed by the time it expires (max. 90days) you can choose for us to send you a text message to your mobile phone.

Limit and stop orders will fail where there is insufficient cash (purchase orders) or stock (sale orders) at the point it would otherwise be completed.

Where an order is in excess of the maximum online deal size (perhaps because the RSPs have reduced the maximum online size), our dealers will try to execute the order manually. This will be on a best endeavours 'fill or kill' basis, whereby if the whole order cannot be dealt at that time it will be cancelled.

For further information about Limit and Stop orders please call Customer Services on 0845 0700 720.

Another useful option alongside Limit and Stop orders is our free Alerts facility.

Set your preferences to arrange an SMS or email alert and we will let you know when your Limit and Stop orders are completed or expire.

To set alerts, log in to your account then check the appropriate box under the 'Preferences' tab in My Account'.