Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Stop loss positions

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
EssDeeAitch
Lemon Slice
Posts: 655
Joined: August 31st, 2018, 9:08 pm
Has thanked: 268 times
Been thanked: 251 times

Stop loss positions

#164718

Postby EssDeeAitch » September 6th, 2018, 5:55 pm

Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?

tjh290633
Lemon Half
Posts: 8208
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4096 times

Re: Stop loss positions

#164731

Postby tjh290633 » September 6th, 2018, 6:53 pm

In a word, no. I don't use them for anything, but occasionally have regretted not doing so.

TJH

ermintrade
Posts: 27
Joined: November 9th, 2016, 11:42 am
Has thanked: 2 times
Been thanked: 18 times

Re: Stop loss positions

#164759

Postby ermintrade » September 6th, 2018, 8:50 pm

I sometimes use stop-losses for individual shares. I find a moving 20% stop-loss is usually best. I rarely use stop-losses for other types of investments eg ITs, OEICs or ETFs. In most cases, if I am convinced about the long term merits of a fund or IT, I use big falls as an opportunity to top up. At the moment that applies to Emerging Market ITs - so I will be topping up my India, Vietnam and China ITs.
When the whole market is falling, it is simply not worth applying stop-losses to everything. The problem is, when do you buy back in? In my 30 year investing career I've found that it is best to just ride out all market fluctuations.
Regards
ermintrade

GoSeigen
Lemon Quarter
Posts: 4350
Joined: November 8th, 2016, 11:14 pm
Has thanked: 1590 times
Been thanked: 1579 times

Re: Stop loss positions

#164765

Postby GoSeigen » September 6th, 2018, 9:21 pm

EssDeeAitch wrote:Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?


No, I call them guaranteed loss orders. Much better to use limit orders than stop orders.

If you don't want the price to go against you, a) don't buy or b) buy less or c) buy only when the price has already moved.These techniques are called respectively: a) not chasing every opportunity; b) risk management and c) limit order.


GS

Gengulphus
Lemon Quarter
Posts: 4255
Joined: November 4th, 2016, 1:17 am
Been thanked: 2628 times

Re: Stop loss positions

#164800

Postby Gengulphus » September 7th, 2018, 3:21 am

EssDeeAitch wrote:Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?

Only the -100% stop loss that I cannot help having for shares, and that IIRC has applied a total of 5 times in about 20 years of reasonably significant investing. The most recent of those was Carillion, the only other large cap one was Bradford & Bingley, and the other three were smallcaps that I knew were significantly risky.

Gengulphus

CryptoPlankton
Lemon Slice
Posts: 786
Joined: November 4th, 2016, 12:12 pm
Has thanked: 1544 times
Been thanked: 873 times

Re: Stop loss positions

#164870

Postby CryptoPlankton » September 7th, 2018, 11:52 am

Gengulphus wrote:
EssDeeAitch wrote:Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?

Only the -100% stop loss that I cannot help having for shares, and that IIRC has applied a total of 5 times in about 20 years of reasonably significant investing. The most recent of those was Carillion, the only other large cap one was Bradford & Bingley, and the other three were smallcaps that I knew were significantly risky.

Gengulphus

I hesitate to question your interpretation of the term, Gengulphus, but I'm not sure how it can be possible to call -100% a "stop loss" given its generally understood definition? :)

More seriously, I do think stop losses have a place in short-term (particularly leveraged) trading strategies. However, when investing for the long-term, I'd rather not be thrown out of a position because of the price movement alone. Rather than a stop loss, I think it may be a good idea to set up an "alert" if a certain price drop is reached - then investigate the possible reasons for that drop before deciding whether selling is the appropriate response.

Lootman
The full Lemon
Posts: 18680
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6563 times

Re: Stop loss positions

#164874

Postby Lootman » September 7th, 2018, 12:03 pm

CryptoPlankton wrote:
Gengulphus wrote:
EssDeeAitch wrote:Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?

Only the -100% stop loss that I cannot help having for shares, and that IIRC has applied a total of 5 times in about 20 years of reasonably significant investing. The most recent of those was Carillion, the only other large cap one was Bradford & Bingley, and the other three were smallcaps that I knew were significantly risky.

I hesitate to question your interpretation of the term, Gengulphus, but I'm not sure how it can be possible to call -100% a "stop loss" given its generally understood definition? :)

More seriously, I do think stop losses have a place in short-term (particularly leveraged) trading strategies. However, when investing for the long-term, I'd rather not be thrown out of a position because of the price movement alone. Rather than a stop loss, I think it may be a good idea to set up an "alert" if a certain price drop is reached - then investigate the possible reasons for that drop before deciding whether selling is the appropriate response.

If the real intent is to trade a range then I'd use options rather than stop or limit orders. That way I get paid while I wait.

So if I want to buy at 10 and the current price is 11, then sell a 10 Put. Either I buy at 10 or I trouser the premium.

Likewise if I want out at 12, I sell a 12 Call

Or maybe sell a 12 Call and use the premium to buy a 10 Put. Then at zero cost I am protected below 10 without having to be out of the position.

formoverfunction
Lemon Slice
Posts: 329
Joined: June 12th, 2018, 9:27 pm
Has thanked: 86 times
Been thanked: 115 times

Re: Stop loss positions

#164881

Postby formoverfunction » September 7th, 2018, 12:22 pm

EssDeeAitch wrote:Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?


Not very often, if never, I check my portfolio every day.

I use notifications on my core holding to tell me if there's been big daily moves - I believe one was triggered yesterday for UEM, so it's been reset and as consequence moved up my buy list by a notch.

I don't hedge in any way except thought the portfolio's holdings.

Although, I am exploring using senior secured debt to offset my start-up investments and risk-on-equity-long listed portfolio.

My listed portflio usually benefits from weak sterling and I've been buying high yielding UK REITS to try and offset that and play a potential uplift game from a very soft brexit. Only very slowly by scaling in.

At some point I will need to consider developing a more specific stratgy for dealing with broader market losses and sterling exposure.

As you can guess, the last few days has been tough, sterling strengthening, and a rough patch for EM.

CryptoPlankton
Lemon Slice
Posts: 786
Joined: November 4th, 2016, 12:12 pm
Has thanked: 1544 times
Been thanked: 873 times

Re: Stop loss positions

#164889

Postby CryptoPlankton » September 7th, 2018, 12:44 pm

Lootman wrote:
CryptoPlankton wrote:
More seriously, I do think stop losses have a place in short-term (particularly leveraged) trading strategies. However, when investing for the long-term, I'd rather not be thrown out of a position because of the price movement alone. Rather than a stop loss, I think it may be a good idea to set up an "alert" if a certain price drop is reached - then investigate the possible reasons for that drop before deciding whether selling is the appropriate response.

If the real intent is to trade a range then I'd use options rather than stop or limit orders. That way I get paid while I wait.

So if I want to buy at 10 and the current price is 11, then sell a 10 Put. Either I buy at 10 or I trouser the premium.

Likewise if I want out at 12, I sell a 12 Call

Or maybe sell a 12 Call and use the premium to buy a 10 Put. Then at zero cost I am protected below 10 without having to be out of the position.

What on earth has any of that got to do with the OP? I briefly mentioned it in passing (thinking of spread betting, actually) as a possible use for stop losses. If you wish to go off topic (as you often seem to) then I'd suggest it would be better to start a new thread.
Moderator Message:
Calm it, chaps. It's another strategy and is relevant to the discussion.

TJH

Lootman
The full Lemon
Posts: 18680
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6563 times

Re: Stop loss positions

#164892

Postby Lootman » September 7th, 2018, 1:05 pm

CryptoPlankton wrote:What on earth has any of that got to do with the OP? I briefly mentioned it in passing (thinking of spread betting, actually) as a possible use for stop losses. If you wish to go off topic (as you often seem to) then I'd suggest it would be better to start a new thread.

On topic, in my opinion. Options can be used to simulate stop or limit orders, and are preferable in certain ways.

In fact I used to use stop/limit orders a fair amount but no longer need to, for this reason.

So I think it's relevant and am not sure why you could not just ignore my comment if it is not of interest to you.

CryptoPlankton
Lemon Slice
Posts: 786
Joined: November 4th, 2016, 12:12 pm
Has thanked: 1544 times
Been thanked: 873 times

Re: Stop loss positions

#164918

Postby CryptoPlankton » September 7th, 2018, 3:09 pm

Lootman wrote:
CryptoPlankton wrote:What on earth has any of that got to do with the OP? I briefly mentioned it in passing (thinking of spread betting, actually) as a possible use for stop losses. If you wish to go off topic (as you often seem to) then I'd suggest it would be better to start a new thread.

On topic, in my opinion. Options can be used to simulate stop or limit orders, and are preferable in certain ways.

In fact I used to use stop/limit orders a fair amount but no longer need to, for this reason.

So I think it's relevant and am not sure why you could not just ignore my comment if it is not of interest to you.

I doubt very much it is what the OP was enquiring about, but if you seriously think anyone is interested...

(I almost certainly would have ignored it if it wasn't for the fact that, for some strange reason, you quoted me before going off on a tangent. Don't worry, there will be more ignoring in future! ;) )

Lootman
The full Lemon
Posts: 18680
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6563 times

Re: Stop loss positions

#164937

Postby Lootman » September 7th, 2018, 5:12 pm

CryptoPlankton wrote:I doubt very much it is what the OP was enquiring about

I suggest that you leave that judgement to the OP rather than baselessly speculate upon it yourself. And focus on the topic rather than criticising other contributors as per the TLF guidelines.

tjh290633
Lemon Half
Posts: 8208
Joined: November 4th, 2016, 11:20 am
Has thanked: 913 times
Been thanked: 4096 times

Re: Stop loss positions

#165013

Postby tjh290633 » September 8th, 2018, 12:22 am

I can recall one occasion when I effectively used a stop loss on a fund. It had grown to such an extent that I had decided to sell sufficient to fund another year's subscription to my share ISA (or PEP). It started to fall and I decided to cash in before the fall had passed the 5% mark. As it turned out, it was a good decision.

That is the one and only time, but I wish I had done it with Marconi, Mapeley, Cattles and Carillon.

TJH

Gengulphus
Lemon Quarter
Posts: 4255
Joined: November 4th, 2016, 1:17 am
Been thanked: 2628 times

Re: Stop loss positions

#165061

Postby Gengulphus » September 8th, 2018, 9:44 am

CryptoPlankton wrote:I hesitate to question your interpretation of the term, Gengulphus, but I'm not sure how it can be possible to call -100% a "stop loss" given its generally understood definition? :)

Well, a stop-loss is intended to stop any further losses from occurring beyond those that have already built up, and it most certainly doesn't stop those that have already built up from occurring, and that's certainly what my -100% stop loss (aka limited liability law) did for Carillion, for example. Further, investments that don't benefit from limited liability have certainly been known - it was a feature of the Lloyds insurance market (not the bank or its shares) for many years, and might still be (I haven't read anything about it for many years now, so am seriously out of touch on whether that unlimited liability still exists). I'm pretty sure that most Carillion holders will be just as glad as I am about that -100% stop loss existing - taking a total loss of the money invested in the Carillion shares is bad enough, but facing a bill for what I suspect would be many times that amount to ensure all its creditors get paid would be far worse... (Though on the flip side, had Carillion shares somehow been an unlimited-liability investment, I would almost certainly never have bought them in the first place!)

Also, the -100% stop loss does have a reliability advantage - with it, you really won't lose more than it says you will. With stop losses as more generally understood, you can lose a lot more than you budgeted for - it just becomes a much rarer event. For instance, someone who bought £30k of Carillion shares (*) at 15p each on January 12th and put a -20% stop loss on them might have reckoned they could only lose £6k on the position - but they would still have lost all £30k, because the share price low that day was 12.5p, not enough to trigger it, and the shares were suspended before trading started on January 15th, the next trading day.

But yes, my remark wasn't intended entirely seriously, and my -100% stop loss isn't what people generally think of as a stop loss (don't think I would quite say that it doesn't match the "generally understood definition", because I haven't ever seen such a thing, but it certainly doesn't match people's general understanding of the term). But there's definitely a serious side to it, which is that for shares at least, stop losses serve a similar function to leverage, in the sense that they help people invest larger sums than they would otherwise feel able to, and thus take better advantage of fairly small percentage expected returns (**). Leverage does that by making them able to invest larger sums, stop losses do it by reducing the risk that a single decision which turns out to be incorrect will lose them a large part of one of the larger sums. In the case of leverage, one pays a cost in terms of the interest one pays, while in the case of the stop losses, one pays a cost in terms of the lost returns from shareholdings that one is stopped out of because of a temporary bad patch. In both cases, the question is whether one gains enough from feeling OK about investing the larger sums to pay the cost and still come out ahead.

(*) Note by the way that I'm talking here about holding the shares. Holding near-equivalent derivatives like CFDs and spreadbets is different because the types of stop loss that are available is (at least AFAIAA) one of the things on which they differ and so are only near-equivalent rather than absolutely 100% equivalent - in particular, I have seen guaranteed stop losses available on spreadbets.

(**) Individual returns, that is, not rates of return. E.g. a short-term trading strategy and an LTB&H strategy might both get a 10% annualised rate of return on a single position's worth of investment, but the short-term trading strategy might be doing that with individual gains geometrically averaging just under 1%, compounded 10 times per year, and the LTB&H strategy with a single shareholding held for 10 years and producing a gain of about 160%.

CryptoPlankton wrote:More seriously, I do think stop losses have a place in short-term (particularly leveraged) trading strategies. However, when investing for the long-term, I'd rather not be thrown out of a position because of the price movement alone. Rather than a stop loss, I think it may be a good idea to set up an "alert" if a certain price drop is reached - then investigate the possible reasons for that drop before deciding whether selling is the appropriate response.

Agreed entirely, and possibly my remarks above will help with understanding why leverage and stop losses go better with short-term trading strategies.

Gengulphus

Lootman
The full Lemon
Posts: 18680
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6563 times

Re: Stop loss positions

#165239

Postby Lootman » September 9th, 2018, 9:10 am

Gengulphus wrote:Also, the -100% stop loss does have a reliability advantage - with it, you really won't lose more than it says you will. With stop losses as more generally understood, you can lose a lot more than you budgeted for - it just becomes a much rarer event. For instance, someone who bought £30k of Carillion shares (*) at 15p each on January 12th and put a -20% stop loss on them might have reckoned they could only lose £6k on the position - but they would still have lost all £30k, because the share price low that day was 12.5p, not enough to trigger it, and the shares were suspended before trading started on January 15th, the next trading day.

That made me wonder what happens to listed options on a share that has been suspended. I am of course aware that a stop loss may not be activated if a share gaps in any serious way, and especially when it effectively goes to zero as in your example. But I had always assumed that a put option (which is just a different form of stop loss) would still work because it would go up in value, penny for penny, once the stop loss/strike price is breached, even if the share gaps down.

But if a share is suspended overnight, then are the listed options also suspended? After all, they cannot be exercised. So perhaps the problem you cite also extends to derivatives based on the same underlying. (You mentioned spread bets and CFD's as well, but I know nothing about them).

Gengulphus wrote: for shares at least, stop losses serve a similar function to leverage, in the sense that they help people invest larger sums than they would otherwise feel able to, and thus take better advantage of fairly small percentage expected returns (**). Leverage does that by making them able to invest larger sums, stop losses do it by reducing the risk that a single decision which turns out to be incorrect will lose them a large part of one of the larger sums. In the case of leverage, one pays a cost in terms of the interest one pays, while in the case of the stop losses, one pays a cost in terms of the lost returns from shareholdings that one is stopped out of because of a temporary bad patch. In both cases, the question is whether one gains enough from feeling OK about investing the larger sums to pay the cost and still come out ahead.

I had not thought of stop losses as a form of leverage, but I do see what you mean. And in fact, again using options instead of stops, there is a sense in which I feel I can be more fully invested if at least a portion of the value at risk is hedged in some way.

This is much in the same way as I might choose to be 100% invested in an asset allocation or absolute return IT like Personal Assets where I would never be 100% invested in pure equities.

That said, if a stop is activated then the result is that I am less leveraged, and that surely is the main idea i.e. as the market falls I gradually switch to cash and quicker than I could do manually. The key is choosing the trigger price. Too close and you will be stopped out on a wobble. Too far and you've already lost a bundle by the time it triggers.

When I have used stops they have usually been trailing stops, with the trigger price set as a percentage below the current price. That way I can hopefully ride the share up and then be stopped out when it falls back, say, 5%. The broader idea is that if you ride your winners and cut your losers, then you should gain more than you lose over market cycles.

Gengulphus
Lemon Quarter
Posts: 4255
Joined: November 4th, 2016, 1:17 am
Been thanked: 2628 times

Re: Stop loss positions

#165319

Postby Gengulphus » September 9th, 2018, 2:39 pm

Lootman wrote:
Gengulphus wrote:Also, the -100% stop loss does have a reliability advantage - with it, you really won't lose more than it says you will. With stop losses as more generally understood, you can lose a lot more than you budgeted for - it just becomes a much rarer event. For instance, someone who bought £30k of Carillion shares (*) at 15p each on January 12th and put a -20% stop loss on them might have reckoned they could only lose £6k on the position - but they would still have lost all £30k, because the share price low that day was 12.5p, not enough to trigger it, and the shares were suspended before trading started on January 15th, the next trading day.

That made me wonder what happens to listed options on a share that has been suspended. I am of course aware that a stop loss may not be activated if a share gaps in any serious way, and especially when it effectively goes to zero as in your example. But I had always assumed that a put option (which is just a different form of stop loss) would still work because it would go up in value, penny for penny, once the stop loss/strike price is breached, even if the share gaps down.

But if a share is suspended overnight, then are the listed options also suspended? After all, they cannot be exercised. So perhaps the problem you cite also extends to derivatives based on the same underlying. (You mentioned spread bets and CFD's as well, but I know nothing about them).

Sorry, I know very little about listed options - I've looked at them fairly briefly on past occasions and decided I wasn't interested in using them. About the only thing I can say about them is that I'm pretty certain there will be an underlying contractual basis, so if I wanted to know the answer to such questions, the way I would go about it is to find the contract and see what it says.

The same applies to spreadbets and CFDs as well, by the way - it's just that in the course of one such look at spreadbets, I saw that the provider was offering guaranteed stop losses as a feature (needless to say, at a somewhat higher cost than ordinary stop losses). I still decided I wasn't interested, and so took it no further.

Lootman wrote:
Gengulphus wrote: for shares at least, stop losses serve a similar function to leverage, in the sense that they help people invest larger sums than they would otherwise feel able to, and thus take better advantage of fairly small percentage expected returns (**). Leverage does that by making them able to invest larger sums, stop losses do it by reducing the risk that a single decision which turns out to be incorrect will lose them a large part of one of the larger sums. In the case of leverage, one pays a cost in terms of the interest one pays, while in the case of the stop losses, one pays a cost in terms of the lost returns from shareholdings that one is stopped out of because of a temporary bad patch. In both cases, the question is whether one gains enough from feeling OK about investing the larger sums to pay the cost and still come out ahead.

I had not thought of stop losses as a form of leverage, but I do see what you mean. And in fact, again using options instead of stops, there is a sense in which I feel I can be more fully invested if at least a portion of the value at risk is hedged in some way.

To avoid anyone reading this from getting the wrong end of the stick about what I think, I too don't think of stop losses as a form of leverage: they're a very different tool to leverage, though both can assist with the purpose I described. By analogy, a chisel, a carpenter's plane and sandpaper can all assist with the job of making a rough plank of wood into a smooth, shaped finished piece, but none of them is a form of any of the others.

As regards hedging of any form, my personal way of dealing with the purpose it serves (i.e. not taking too big a loss on an investment, where "too big" means big enough to hurt me badly, not necessarily anyone else!) is basically to avoid needing anything more than limited liability and diversification to deal with that purpose. If I've got so much in a share that my maximum future loss on it (i.e. its current value) would hurt me badly, my attitude is that I've got too much in it and I should sell my position down, not hedge it (and yes, I'm aware of and take account of the severe problems that selling down a large position in a smallcap that runs into trouble might pose!).

It does mean that my overall portfolio is a lot more diversified than many would be happy with. Essentially, assuming the portfolios concerned are all roughly equally-weighted, running a 50-share portfolio with only the '-100% stop loss' provided by limited liability, risks similarly-sized 'normal' losses to running a 20-share portfolio with -40% stop losses or a 10-share portfolio with -20% stop losses. As the portfolio size comes down, the number of holdings to manage comes down, but the management work required per holding rises (due partly to the extra need to manage the stop loss and partly to the need to make reinvestment decisions more often, since shares suffer 20% price falls a lot more often than total losses), one takes those 'normal' losses more frequently per holding, and the maximum size of 'abnormal' losses caused by major gapping down through the stop loss rises. So what happens to the total amount of management work required changes in a rather complex way - and how it works out for any individual depends further on how much time they're willing to make available for the management work, what types of such work they're good at, what types of such work they're interested in (not necessarily the same thing!), etc.

So basically, I'm just offering my approach as an alternative approach to using 'proper' stop losses, just as Lootman offered the use of options as such an approach. People will need to decide for themselves which approach suits them best!

Gengulphus

MaraMan
Lemon Slice
Posts: 497
Joined: November 22nd, 2016, 3:30 pm
Has thanked: 219 times
Been thanked: 228 times

Re: Stop loss positions

#165450

Postby MaraMan » September 10th, 2018, 10:49 am

Simple answer amongst a forest of somewhat wordy ones, yes I have and do, and have only ever pleased that I do.

Seems sensible to me, but clearly not to the majority of responders to the question (those that did anyway).

MM

MaraMan
Lemon Slice
Posts: 497
Joined: November 22nd, 2016, 3:30 pm
Has thanked: 219 times
Been thanked: 228 times

Re: Stop loss positions

#165457

Postby MaraMan » September 10th, 2018, 11:48 am

I should have added that I only hold individual shares and IT's, however for me the rationale of limiting a downside extends to any investment.

MM

Clitheroekid
Lemon Quarter
Posts: 2856
Joined: November 6th, 2016, 9:58 pm
Has thanked: 1384 times
Been thanked: 3771 times

Re: Stop loss positions

#165510

Postby Clitheroekid » September 10th, 2018, 4:16 pm

EssDeeAitch wrote:Hi, I am interested to know if people apply stop loss positions across the spectrum of shares, UT/IT/ETF's or just shares?

Yes, I use them quite often in respect of shares that I'm `trading', i.e. shares that I've bought for a quick profit rather than to keep.

I do so in order to try to lock in a profit. Quite often the share will increase quite rapidly over a short period - maybe as little as a couple of days - but I may not want to sell as I think it has further to go. In that situation I'll often impose a stop loss, usually around 5-10% below its current level.

In theory I much prefer a trailing stop loss, but the dealer I use doesn't appear to have that facility, and I can't be bothered with the hassle of moving. So I use a rather crude manual version, whereby if the price increases I'll cancel my old stop loss and set a new one. Unfortunately, this depends on my checking the price regularly, which I don't do as often as I should.

For similar reasons I tend to impose them for fairly short periods - perhaps 2 or 3 days - though I'll set longer ones if, for example, I'm travelling abroad and lack the ability and/or the inclination to check the price.

The main difficulty for me is deciding how much margin to build in - i.e. how much below the current price the stop loss should be set. Generally, the larger the company the narrower the margin you can set, as the price volatility tends to decline in proportion to the size of the company. It's unusual for a FTSE 100 company to fall by more than 5% in a day, whereas some AIM stocks regularly drop 10-20% in a day without it being a sign of disaster. It's also influenced by the amount of profit I'm carrying. - the greater the profit the larger the drop I can accept before selling.

In my experience they're a very useful tool, and over the years they've saved me a considerable sum. Yes, there have been odd occasions where a temporary drop has triggered a sale when if the decision had been mine I wouldn't have sold, but such occasions have been far outnumbered by sales that I would have missed activating simply because I wasn't watching the price like a hawk.

EssDeeAitch
Lemon Slice
Posts: 655
Joined: August 31st, 2018, 9:08 pm
Has thanked: 268 times
Been thanked: 251 times

Re: Stop loss positions

#165597

Postby EssDeeAitch » September 11th, 2018, 5:41 am

Thanks Clitherokid, a nice, comprehensive answer. It does highlight that selling decisions have as many pratfalls as buying. Complicated stuff getting it right.


Return to “Investment Strategies”

Who is online

Users browsing this forum: No registered users and 12 guests