Actioning Stop Losses

[TerryA]

Could some of the experts give their opinions on the best method of actioning stop loss sell orders.

In particular does one;

a. wait until the close
b. work on the closing price as triggering the stop loss or any of the intra day trades
c. place the sell order "at market" for the following day or at the end of day offer price.

I trade on line and generally monitor my watch list twice a day, about 1 pm and then after the close.

Thanks in advance.

[Phaedrus]

Terry,
You missed option d!
This is what I do - check a few minutes before the market closes, taking the latest price as the "Close". If, at that level, an exit is signalled (by a stop-loss or any other sell signal) I sell at market. I do take care though not to attempt trading with illiquid or thinly traded stocks. Don't cut it too fine - you may miss out if your broker is a bit slow. I find about 15 minutes gives a reasonable safety margin.
This way you only need to check the market once a day, but you are in a position to act, if need be.

[TerryA]

Phaedrus,

Many thanks for this sage advice. I shall apply it and see how I get on.

Best wishes,

[limegreen]

FWIW, I've sort of learnt this strategy myself. Phaedrus tipped me that I should chart close rather than OHLC. Since then, I've found it interesting the number of times the morning's action is either reversed, or no-where near the intial burst. In the past I've made some silly buys too soon after good news, only to find by close, the price is rather more settled. Spikes down certainly seem to be the same.

[TerryA]

Limegreen,

Thank you.

It is just that sort of scenario that made me ask the question.

A second stop loss was triggered at 49c about midday and I sold At Market (45C) only to find that the close was bakc to 50 and has stayed there ever since.

I had also missed an earlier trend break and it eas the combination of these two events for the same stock that made me decide to buy Metastck and the EOD service.

Terry

PS what would we do without Phadreus ?

[limegreen]

Something I have wondered about, however, is if there is a really really serious run, is whether a computer-triggered-and-actioned stop (ie, one done through your broker) set well off the action, would save a position in the extent of a huge sell-down. Or whether in those situations, there are so few buyers they'd be hopeless anyway.

Well, for now at least, my "stops" are next to my monitor, and I have a squizz on close.

[zyreon]

in big leveraged speculative positions you should have protective puts (or calls if short).
know why? just look at ELN and BIIB 1 month chart (NYSE, NASDAQ).

stop loss wont help you at all in that kind of situation.

(note you're probably mostly safe in NZ from that kind of situation, but it pays to know a stop loss is only one of many risk management tools)

[Dazza]

if too many of ur stop losses are triggered?
and then u buy again and then stop losses triggered again...

or u exited out due to timeline etc what duncan does..

wouldnt ird say 'ur a trader'

as if u had invested in the company for long term, shouldnt u be buying it up when its dipping?!

[limegreen]

Dazza: Being a trader is about majority intention. However, assuming that your stops are not set tight, then it's very unlikely that they'll be triggered, so you won't be buying and selling very often, so you be so much at risk of being a trader. For example, I recently topped up on FBU. My stop is around $6.50, which would require a *Major* drop in the SP to trigger. Ie, pretty bloody unlikely.

[Dazza]

could u enlighten me more , on ur avg buy price of FBU then?!

*it hit 7.07 on monday... hehehe *