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Forum Archive Index - September 2002

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Re: [sharechat] Setting Stops


From: "Mr Nua" <mr_nua@hotmail.com>
Date: Thu, 19 Sep 2002 18:24:36 +1200


He Trader100,

The problem you are having is common among traders.

The best way to combat the intraday movement is to wait for the share to
close below your stop. A sell order can be placed with your broker the next
day.

This is especially important when thinking of selling around support levels,
where traders are often taken out by hammer patterns and the like (This is
particularly frustrating - being taken out by a bullish pattern).

Around support or trendlines, I will wait for a close below the stop and
sell if it falls further the next day. With quick movers, I'll use an
absolute
trailing stop (sell as soon as it is hit) as it's likely they come down as
quick as they go up

Vijay (and Elder) are correct when adjusting the stop to suite the stock.
For some shares, the stop should be tight, for others (esp nice uptrenders)
a looser stop works better. I guess it depends on your strategy, risk
profile and the type of share.

I prefer trigger stops (sell if it falls below this level), but I have
friends who wait for the stop to be hit, and then just use a market or limit
order.

Hope this helps,

Nua


----- Original Message -----
From: "trader 100" <trader_100@hotmail.com>
To: <sharechat@sharechat.co.nz>
Sent: Thursday, September 19, 2002 8:49 AM
Subject: [sharechat] Setting Stops


> There have been several interesting discussions on the setting of stops on
> sharechat in the past which I have read.  However, they haven't touched on
> the practicalities of leaving stops with a broker.
>
> Specifically, I am finding (during my paper trading) that I often get
> stopped out by an intraday movement which is reversed by the time the
stock
> closes.  I know that the closing price is thought by many to be the most
> important price so theoretically one should only close out a trade if the
> closing price is going to breach a stop.  The trouble is that this would
> involve monitoring all your open positions just prior to the close each
day
> to see whether you should close the position out.  To me this seems
> impractical, especially if you have 3+ positions that are all close to
being
> stopped out.  The only alternative appears to be leaving an order with
your
> broker all the time (which you adjust as you change your stop level),
which
> means that you run the risk of being filled by an intra day movement.
>
> I would also be keen to know whether people favour a straight limit order
> (ie sell XXX at $3.00) over an order which becomes a market sell order
when
> a certain price is touched (ie sell XXX at the market if a trade has gone
> through at $3.00).
>
> Regards,
>
> T100.
>
> _________________________________________________________________
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>
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References

 
Messages by Date [ Next by Date: [sharechat] skc Richard Hooper
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