Forum Archive Index - May 2000

[Nigel Barker <nigelb@cyberxpress.co.nz>]

HI,

I agree with the 10-15% stop loss or so depending on the stock. Any suggestions
as to how to stop waiting for that extra point which doesn't come before the
stock tumbles? Surely setting a percentage means that you will miss some good
gains?
Even with all the information out there it is very difficult to determine what
will happen. Are you better to set a limit and play by the rule? What about any
exceptions?

Nigel


jesse wrote:

> '  …  I don't think ten per cent stop loss rules ..... work particularly
> well for
>   several reasons'.
>
> Hi Nigel,
> agree. Every investment is different, but imho, every investor should
> have a plan. Personally, if I'm trading a stock, I know before I buy it
> where my out is, whether its a gain or a loss. The most difficult thing
> is executing it or sticking to it. It's so easy to reach your profit
> goal and say, please, please, just one more point! Same thing when
> cutting a loss.
>
> 'If you buy a value share then:
> If the entire market is declining...then the fact that your share is
> declining is of
>   no particular note.'
>
> Yeah, but even long term investors can benefit from basic money
> management and sticking to your risk/reward plan.  If the market is down
> 2%, but your stock is down 5%,  something else is cooking. Each stock
> has it's own volatility/risk, so they aren't going to act the same way.
>
>   'If you buy a trading share then:
>   If the share falls by more than a set amount, the trade has failed.
>   Therefore you should sell'.
>
> Exactly, good money management, executed by a stop loss. Where you set
> the stop loss, 5%, 10% depends on your risk/reward and the individual
> stock volatility, market conditions at the time and so on.
>
> 'Unless you have a  proper broker (to watch the market for you) you are
> likely to miss a stop  loss and end up with a 15 to 20 % loss'.
>
> Yep, thats why if your trading you should use a day broker (not an on
> line broker) so you can set trailing stops to auto follow the stock.
>
> cheers
> j
>
> ----------------------------------------------------------------------------
> http://www.sharechat.co.nz/          New Zealand's home for market investors
> To remove yourself from this list, please us the form at
> http://www.sharechat.co.nz/forum.html.


----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
To remove yourself from this list, please us the form at
http://www.sharechat.co.nz/forum.html.