I would be interested to hear opinions on the best way to set a stop loss. There are so many methods. I got stopped out on 2 trades yesterday. One has already rebounded somewhat. I’m considering going back to sticky-note stop-loss, but I can’t stay by the computer all day.
Market volatility often trips a stop loss soon after its in place. And often well below market. Best to avoid them.
Not a good idea until stock is up at least 10%. And then better to sell part at market to reduce risk.
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Stop orders are traders’ tools, not investors’ tools. My broker advised to use only mental stop orders.
The Captain
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My practice on stop losses has been to actually use them to protect gains.
For example, I SHOULD have used one on UPST last week when the sell off started. I should have used it to protect the majority of my massive YTD gains. When they trigger, I am completely OK with that as I have booked a gain. I don’t second guess what they do after I sell any more than I would second guess when I sell at market.
I never use them to protect from a “loss” especially if I am at all concerned with what the stock does after I am out.
Set them at a price where you would be happy taking PROFITS and forget about them (or even better, if your broker allows, set that at X% of the current price and let the stop loss amoun grow as the stock does).
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Hi @Hawkwin,
If a trade is running longer than I expected, I set a GTC trailing sell. Normally between 4% and 10% depending on the volatility. I set these in the second week or later.
I believe I have only done a dozen or so of these …
Gene
All holdings and some statistics on my Fool profile page
https://discussion.fool.com/u/gdett2/activity (Click Expand)
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Thank you all! This is good info to help me develop a better plan!
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