Stop losses

Lookup a youtube video on it. Don't make a trade without one unless you're staring at your PC 100% of trading hours

Trading - use stop losses, investing - dont use them

I use trailing stop-loss orders quite a bit to preserve gains. They aren't guaranteed to work as intended though. If you're invested in something with a low daily volume, or the market drops like a rock, your sell order may not get filled once triggered.

As always, use your head and don't go all-in on any one investment.

Use a stop ALWAYS. Where you place it depends on the stock, and your position size. Just make sure you have one, and place it as soon as you buy. You can always buy back.

Protecting capital is number 1 vs dreaming of riches. Most here don't use stops, are noobs, and are waaaaaaay down (eg see cannabis thread)

If you are buying on the CSE they do not allow stops due to lack of liquidity. Buyer beware

Even if you are staring at quotes all day, it becomes very easy to decide on where you will sell, then ignore ti once it gets there. Then it goes up a bit, and drops more. Then it drops even more, and you think that is it it has to go up...and it drops even more. Eventually you can't look anymore...and you end up holding to zero. That is the ones who don't use them, buy, hope it goes up or hold forever, or until it hits zero

It's easy to lose big with stops though, isn't it?

Consider, for instance, a person with 2 accounts, or 2 people with 2 accounts. Stock XYZ is selling at $50. Account A sets up a buy limit order for 10000 shares at $5. Account B sells 5 shares at $5, partially filling the buy order. This results in a large drop in market price, albeit temporarily, which triggers any accounts with stops, and the rest of the buy order is filled.

Options seem to be the only solid way to protect investments, a sort of insurance cost paid every time contracts expire.

I told people over a year ago to use them in the weed space and they all went mental at the suggestion.

OP needs to start a thread on "how does the stock market work". Others can respond, i am out of here

use a stop or lose

purplemonkey wrote: ↑ It's easy to lose big with stops though, isn't it?

Consider, for instance, a person with 2 accounts, or 2 people with 2 accounts. Stock XYZ is selling at $50. Account A sets up a buy limit order for 10000 shares at $5. Account B sells 5 shares at $5, partially filling the buy order. This results in a large drop in market price, albeit temporarily, which triggers any accounts with stops, and the rest of the buy order is filled.

Options seem to be the only solid way to protect investments, a sort of insurance cost paid every time contracts expire.

So XYZ last traded at $50 and then there is no further buyer interest at all? Order book empty, no market makers? Account B doesn't have to exist in this example then. Account A just needs to throw out stink bids in order to trip your stop. If your stock is that illiquid what are the chances there's even a market for options? If you don't like putting in stops, you can set yourself up for price alerts so it's on you to pull the trigger if price hits your pain point.

zoro69 wrote: ↑ OP needs to start a thread on "how does the stock market work". Others can respond, i am out of here

use a stop or lose

You're right, I'm learning, and was referencing "stop hunting" phenomena described in this article:

https://www.investopedia.com/terms/s/stophunting.asp

Seems like you need a large volume to create a shift, and take advantage of the strategy though.

introspect wrote: ↑ So XYZ last traded at $50 and then there is no further buyer interest at all? Order book empty, no market makers? Account B doesn't have to exist in this example then. Account A just needs to throw out stink bids in order to trip your stop. If your stock is that illiquid what are the chances there's even a market for options? If you don't like putting in stops, you can set yourself up for price alerts so it's on you to pull the trigger if price hits your pain point.

Not against stops. I'm trying to gain a better understanding though to be clear about the pros, and cons. I appreciate everyone's input.

whatyoulookinatbud wrote: ↑ Trading - use stop losses, investing - dont use them

This. Use stop losses for trading.

For investing for the long term with good quality stocks, I think the market makers and other professionals will "stop you out." ***In an upward trending market*** they will see your stop loss, scoop up your shares (essentially steal them), then bring the stock right back up.

If you think this doesn't happen in the real world, you're being delusional.

I’ve had zero stop losses on for years but I rarely trade. Although it’s easy to say “you can just buy it back” if you lose a position in a flash crash, you will likely not buy it back. What will happen in a flash crash is you will lose the position and it will run back up before you can buy your position back. While the crash is happening you will panic. Once it runs back up without you, you won’t want to buy it back at a loss. You may think it’ll go lower, but what if the bull market just keeps on chugging without you?

There have been multiple little temporary events where this could have occurred within the last 5 years or so. You may think you’re being sophisticated with a stop loss but when it triggers human psychology will end up interfering to your detriment.

Yes and no. I have been adjusting my strategy over time as I’ve learnt more about trading. It depends on the fundamentals, liquidity, stock price and previous trading patterns for me. Remember that more sophisticated brokers can see exactly where the stops are and raid them by shorting the stock. Seen it happen many times.

There are people commenting who haven't been around over time. this will happen again (it already has in cannabis)

"The crash that followed saw the Nasdaq index, which had risen five-fold between 1995 and 2000,, tumble from a peak of 5,048.62 on March 10, 2000, to 1,139.90 on Oct 4, 2002, a 76.81% fall. By the end of 2001, most dotcom stocks had gone bust. Even the share prices of blue-chip technology stocks like Cisco, Intel and Oracle lost more than 80% of their value. It would take 15 years for the Nasdaq to regain its dotcom peak, which it did on April 23, 2015."

Use a stop, always. Or be a noob, buy... and hold until zero

and the number 2 is, don't listen to random "experts" picks

I lose money when I use stop loss order. It always bounced back after the triggered.

I lose money when I don't use stop loss order. Left bag holding.

Bank always take my money.

llpresident wrote: ↑ I’ve had zero stop losses on for years but I rarely trade. Although it’s easy to say “you can just buy it back” if you lose a position in a flash crash, you will likely not buy it back. What will happen in a flash crash is you will lose the position and it will run back up before you can buy your position back. While the crash is happening you will panic. Once it runs back up without you, you won’t want to buy it back at a loss. You may think it’ll go lower, but what if the bull market just keeps on chugging without you?

There have been multiple little temporary events where this could have occurred within the last 5 years or so. You may think you’re being sophisticated with a stop loss but when it triggers human psychology will end up interfering to your detriment.

I was mulling this over while reading the "lessons learned" thread. So assuming I have a 10% stop loss set on my large ETF holdings and the market drops/crashes 11%. So I am now sitting on a stack of cash. Then what? Do I buy after the next circuit breaker trips? Or 2? Or will there be 3 big drops like in March? Could there be a fourth? Do I go all GIC's then for the rest of my life? Do I wait until it recovers and buy back at new all time highs?

Stop losses seem like just another method of market timing that is obvious in hindsight, but I have no idea how I would actually implement them if there was another crash.

zoro69 wrote: ↑ There are people commenting who haven't been around over time. this will happen again (it already has in cannabis)

"The crash that followed saw the Nasdaq index, which had risen five-fold between 1995 and 2000,, tumble from a peak of 5,048.62 on March 10, 2000, to 1,139.90 on Oct 4, 2002, a 76.81% fall. By the end of 2001, most dotcom stocks had gone bust. Even the share prices of blue-chip technology stocks like Cisco, Intel and Oracle lost more than 80% of their value. It would take 15 years for the Nasdaq to regain its dotcom peak, which it did on April 23, 2015."

Use a stop, always. Or be a noob, buy... and hold until zero

I've seen you bring it up the Nasdaq example a couple of times now. I assume you had stop losses set in Jan/Feb...what were your re-entry points in March/April? Or did you go all cash after the first drop and you're still preserving capital? I'm trying to figure out how they might work for me, but without the benefit of a rear view mirror they seem to be just a different way of reacting and guessing what the markets will do next.