Forum Archive Index - August 2000

["Sue McLellan" <mclellan40@hotmail.com>]

Thanks Rhys but I think I am thinking of something different.  I beleive you 
can buy an insurance and once in place the if the price drops you cannot 
lose more than the price you bought the insurance for. i.e If I now bought 
this insurance for ROCOM now then the price could not drop below $1.40. What 
is this called? Is there such a thing? How much does it cost? How long does 
the policy last for? Thanks again
Sue


>From: Rhys Lewis <rhys.lewis@zivo.co.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: "'sharechat@sharechat.co.nz'" <sharechat@sharechat.co.nz>
>Subject: RE: [sharechat] stop losses
>Date: Tue, 22 Aug 2000 12:27:52 +1200
>
>Looks like we're all sleeping today.  I'll answer this, although there 
>seems
>to be a delay with my email, so someone's bound to have answered it 
>already!
>
>A stop loss is simply a request you make to your broker.
>
>So for example if I bought some TEL @ $6.90, and I figure that I want to
>sell them again automatically if the price drops more than 10%, I would 
>tell
>the broker to buy at $6.90 and to sell again if the price drops below 
>$6.83.
>This is just a conditional sell order which you should be able to make
>without any cost.
>
>However if the price climbs above $6.90 you might want to adjust the stop
>loss order, so you would call the broker and crank it up a little, 
>following
>the rise in the price, and eventually the stop loss will automatically sell
>for you once the share has risen and then started to fall.  (sounds good in
>theory!)
>
>If you use an Internet based broker you can usually place conditional 
>orders
>that don't even go through to the broker until the conditions are reached.
>
>So a stop loss is a safety net that you put beneath the share to prevent 
>you
>from losing too much on the downside.  The theory behind it is that your
>natural inclination is to sell as soon as you see a profit and to hang on
>for grim death if the price drops.  This of course is an effective profit
>minimisation method.  Using the stop loss cuts your losses short, and 
>allows
>your profits to run.  If rises and falls are equally likely, and you only
>exit on 10% falls you should win more than half the time.  But reality has 
>a
>way of laughing at statistics...
>
>The bottom line is that peaks are notoriously difficult to spot, and by
>definition are times of low liquidity, so they are hard to trade on.
>Selling over the crest is much easier.
>
>Rhys Lewis
>
>-----Original Message-----
>From: Sue McLellan [mailto:mclellan40@hotmail.com]
>Sent: Tuesday, August 22, 2000 11:22 PM
>To: sharechat@sharechat.co.nz
>Subject: [sharechat] stop losses
>
>
>Can anyone tell me about stop losses and how much they cost.  I'm thinking
>it may be a good idea for ROCOM.
>________________________________________________________________________
>Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com
>
>
>----------------------------------------------------------------------------
>http://www.sharechat.co.nz/          New Zealand's home for market 
>investors
>http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join 
>now.
>----------------------------------------------------------------------------
>To remove yourself from this list, please use the form at
>http://www.sharechat.co.nz/forum.shtml.
>
>----------------------------------------------------------------------------
>http://www.sharechat.co.nz/          New Zealand's home for market 
>investors
>http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join 
>now.
>----------------------------------------------------------------------------
>To remove yourself from this list, please use the form at
>http://www.sharechat.co.nz/forum.shtml.

________________________________________________________________________
Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com


----------------------------------------------------------------------------
http://www.sharechat.co.nz/          New Zealand's home for market investors
http://www.netbroker.co.nz/        Trade on Credit, Low Brokerage. Join now.
----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/forum.shtml.