tag:blogger.com,1999:blog-30128229.post6279418266305062900..comments2023-09-30T07:11:55.493-06:00Comments on MarketFN.com: Stop Orders for Stock TradingInvestment Househttp://www.blogger.com/profile/14771320644915759241noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-30128229.post-81783738663528204392010-12-07T04:17:15.998-07:002010-12-07T04:17:15.998-07:00Thanks, Grant. I hope many read your experiences s...Thanks, Grant. I hope many read your experiences since I suspect it is a fairly common issue. I sincerely appreciate your forthrightness.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-81705373432427001322010-12-06T13:59:05.825-07:002010-12-06T13:59:05.825-07:00Thanks for writing SUJIT. Stop limit orders to sel...Thanks for writing SUJIT. Stop limit orders to sell (as opposed to stop limit orders to buy) can be quite dangerous and may even prevent the trader from getting out of the position when he should or wanted to exit. As an example, suppose a trader owns XYZ that is trading at $36 and has a stop limit in place with the stop at $35, limit $34.25. Further assume the stock gaps down at the open to $34. He would still be in the position even though his stop was hit when it gapped below $35. While the stop was hit, the limit of $34.25 would prevent the sale of the stock since no one is willing to pay $34.25 (the limit part of the order) when the price has already fallen below that level to $34.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-40293720891779234822010-12-06T09:46:38.935-07:002010-12-06T09:46:38.935-07:00Bill, in reply to your question about how I did wh...Bill, in reply to your question about how I did when I've exited most of a position but kept a small percent, I hate to admit but I've never seen what I was holding come back. A couple of times the price has bounced around near where I sold but I've never had one get up to my entry point. I think most of the time it has been an impluse buy that turned south within a day or two of the buy. Another time it was an RV manufacturer that I bought and sold several times. The last time I wasn't paying attention when the bottom fell out. In fact, I was in the Arizona desert in my RV. When I got home and noticed the share price was below $1, I dumped most of it. But I kept some, just in case. Then gas prices went through the roof. The return from the few hundred shares I had held would not have covered the sales commissions. I think that was in the Fall of 2004 or Jan. Feb. 2005. I was still with a full service broker then. I'm not anymore.<br /><br />Grant W. Johnston, Chico, CAAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-6786842189285042902010-12-05T11:09:46.209-07:002010-12-05T11:09:46.209-07:00Commenting on a previous post about liquidating a ...Commenting on a previous post about liquidating a portion of the holding - this I find hard to accept in my trading strategy. I always sell all when the decision is made. My reasoning is: I'm closing a position because I am not sure of further profits. Now if you still have "hope", it sounds as contradiction to me because half of your brain says close and the other half says do not. In such a case why close at all? Or for that matter, hold at all? <br /><br />In such cases a lot of people advise taking half of it off the table. But my thinking is the any which way the trade goes, you are going to lose on 50% of your position.<br /><br />If I could (I wish) have a super run whereby I can pull off the principal and then have a sizeable chunk of profits, close to original investment, I could afford to keep it on the table to test fate. Now I would be playing with house money. <br /><br />The biggest lesson I've learnt is to cut your losses and cut it fast. Even if that means you are proved wrong later on. My reasons for this approach are: you live to fight another day and downdraft is three times speedier than an updraft. <br /><br />The ideal stop loss point is the Holy Grail.<br /><br />Thanks for an interesting discussion on such an important issue.Anonymoushttps://www.blogger.com/profile/11970970235933481207noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-48149361342328540682010-12-04T18:13:12.915-07:002010-12-04T18:13:12.915-07:00The only loss that I put is Stop Limit. Trailing ...The only loss that I put is Stop Limit. Trailing Stop I would put when my meat is cooked and any extra sauce is welcome. Stop Loss it itself is dangerous especially in these days of High Speed Trading (HST). I think HST is highway robbery and must be banned. The simple way to cut the gangsters to size is to apply the same trading fee for cancellation over and above a legitimate percent - say, 20% of one's trade.<br /><br />Currently there is no bar to a High Speed Trader from issuing bogus orders only to light up the other buy/sell orders and then kill the order in a lightening flash. This makes Stop Loss a sitting duck because Money Managers with vast sums, and an unfair advantage of a peek at the order book, can easily manipulate the prices to the disadvantage of the general public. More people will get whipsawed as a result of HST.<br /><br />I am pretty certain Stop Loss orders aggravated the Flash Crash. Those that lost money could have saved the day if they had Stop Limit instead of Stop Loss/Trailing Stops.<br /><br />However, the idea that an exit strategy should be in place before opening a trade is pure wisdom. Where to place a stop is impossible to say but I for one determine it based on the Daily Chart/Weekly Charts. Smaller time frames don't work for me.Anonymoushttps://www.blogger.com/profile/11970970235933481207noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-40176684544832324662010-12-04T17:13:56.466-07:002010-12-04T17:13:56.466-07:00Thanks for the great contribution, Nona. It defini...Thanks for the great contribution, Nona. It definitely can be difficult to cut losses quickly even once a price has passed our pre-determined exit point since that 'little voice' inside us often encourages us to hang on because "it'll come back." One thing to consider might be to start with a moving average as you did with the 50 day as your initial exit and when you get a steeper move in your favor switch to a shorter moving average.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-40356951272715915172010-12-04T17:11:17.225-07:002010-12-04T17:11:17.225-07:00Interesting approach, Grant. I'm curious how t...Interesting approach, Grant. I'm curious how those 100 shares you hang onto "just in case" have fared over time. Thanks for an interesting and good natured note.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-16955095019313348272010-12-04T13:47:16.165-07:002010-12-04T13:47:16.165-07:00Here's something that might help, Grant: Keep ...Here's something that might help, Grant: Keep in mind the paradox that by taking small losses you make bigger gains overall.<br /><br />I've started chanting a mantra, sometimes out loud but always in my brain, that helps me keep that paradox in mind: "Small losses are good losses! Small losses are good losses!"<br /><br />Hope this helps.<br /><br />~ NonaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-40231790649644339602010-12-04T11:51:51.029-07:002010-12-04T11:51:51.029-07:00The problem I have is not exiting the entire posit...The problem I have is not exiting the entire position once I've decided it's no good. I keep thinking "Maybe I should keep 100 shares, just in case." So I'll sell 90% of my position but keep that remaining 10% for infinity. <br /><br />I eventually reach a point where I can scroll through my portfolio without even seeing the smoldering remains of a bad investment. When I look at it and can't even remember why I bought it, I've reached the point where I can let those last few shares go.<br /><br />Grant Johnston, Chico, CAAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-35548939229993568992010-12-04T11:16:50.044-07:002010-12-04T11:16:50.044-07:00As one of your coaching students, Bill, you have h...As one of your coaching students, Bill, you have helped me to understand the importance of this matter and to give it serious thought.<br /> <br />I'm still developing my exit plan BUT for now, I think that one plan that works for me is to stay in a position when it remains above a pre-determined moving average. (Note: I'm buying in-the-money calls many months out.) <br /> <br />I recently closed out a position at about a 35%+ profit that had, at one time, been over 60% profitable. At the time, my exit point was a cross below the 50-day MA. I am now considering a different strategy: reducing the moving day average to something like 20 or 30 days as the position becomes more profitable. I'll be out sooner with, hopefully, a greater profit. I recognize that I might be out sooner -- and the position could climb to greater profitability without me. No plan is perfect including this one.<br /> <br />There is still the challenge of getting out when you've said you will. I finally closed two positions that had penetrated the 50-day MA early this week -- and didn't do it promptly. I waited for two days hoping the underlying stock would rise. It didn't and I took a greater loss than I should have.<br /> <br />I am trying very hard to keep in mind that SMALL losses are good. Keep losses small, no matter what.<br /> <br />It's not easy -- but it's getting easier (she writes, gritting her teeth!)<br /><br />~ NonaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-30128229.post-56700727658048575352010-12-04T10:45:37.569-07:002010-12-04T10:45:37.569-07:00Thanks, Jim G. You are absolutely right. Penny sto...Thanks, Jim G. You are absolutely right. Penny stocks are a different animal in that they can be extremely volatile and are very, very, very speculative. Most are cheap for a reason and though money can be made on a penny stock, not too many retail traders ever succeed trading them. Stops are exceedingly difficult if available because of the wide percentage swings they can take.<br />Bill KraftBill Kraft, MarketFN.comhttps://www.blogger.com/profile/08274803638438137352noreply@blogger.comtag:blogger.com,1999:blog-30128229.post-91665303224034881622010-12-04T07:45:12.381-07:002010-12-04T07:45:12.381-07:00Stop Limit orders have no place when dealing with ...Stop Limit orders have no place when dealing with penny stocks. Other than that you are right on point. Case in point is SAEI on Friday. A disaster for anyone who had a Stop Loss in place.Jim G.noreply@blogger.com