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.