Stop Loss-some advice please

[KJ]

I have tended to monitor stocks very closely and in the past not used "stop losses"

I am now trying to find out more about how to use them effectively.

I have set up with Direct.On the sell side there is facility for 2 prices -"price limit" & "trigger price".
So if I can give an example-
TWR-say(1) the price ran up to 230 today and I was happy to sell at this price-which price box do I use?

Say (2)it is currently trading at 230-it may go higher but if it does not I would not want to sell at less than 220 if the price weakens-which(price) box do I use.

Any advice/explanation would be appreciated.

[Sky Tower]

Let me give you an example remembering that sellers usually want more for their shares than they are selling for.

If they are selling for $2.20 when you place your order and you want $2.30 then this is normal and is a limit order. On the NBNZ site use Trading > Place Order then up "Sell Down to Price" and enter 2.30.

Stop loss orders are all about protecting your downside and usually involve the term "trigger".

If the shares are at 2.20 and you want to sell if they fall to 2.10 this is a stop loss order.
On the NBNZ site use Trading > Place Conditional Order then "Sell At trigger At Mrket Price" then enter 2.10 as your "trigger price".

The test is whether the "limit you want is higher or lower than the current price". If it is higher then this is normal so just user "Place Order". If the limit you want is lower than the current market price then you are protecting your downside and this is a Stop Loss order - so you "Place Conditional Order"

Does this make it easier to understand?

Disc: Work for NBNZ

[KJ]

Thank you ST-the bloke that I spoke to at Direct told me that the "Price Limit" would be the lower price ie lower than the "Trigger price"-that would be wrong?

In my first example -230-is it correct that the second price box (trigger)would be left blank?

[Sky Tower]

quote:Originally posted by KJ

Thank you ST-the bloke that I spoke to at Direct told me that the "Price Limit" would be the lower price ie lower than the "Trigger price"-that would be wrong?

In my first example -230-is it correct that the second price box (trigger)would be left blank?


No hes correct. But yes leave the price limit box blank. The trigger price is the important parameter.

Just to confuse things you can have a Stop Loss order with both a "Trigger Price AND a Lower Price Limit - that what hes talking about. So it would be the Price is 220 if it falls to 210 then I want to sell my shares but only if you can get rid of them before they reach $2.00.

On the NBNZ site there are two options "Sell at Trigger At Market Price (I always use this) OR "Sell at Trigger Down to Price" if you want to set a bottom limit

The NBNZ site is fully automated (i.e. orders go direct to market) so the shares should definitely sell when the trigger price is reached i.e. 210 or 209 (this is assuming the share price is falling quickly) so in my mind the bottom limit is not necessary

Accordingly I always use the option on the NBNZ site "Sell at Trigger At Market Price".

Disc: Work for NBNZ

[KJ]

Thanks ST-sounds like NBNZ may have more options-May hear from someone who is with Direct.