Forum Archive Index - March 2004

["Baa Baa" <baa_baa@hotmail.com>]

Stop losses ...

Are an open advertisement to the buyer, that sellers are in the market [at 
fixed and observable prices], and consequently, those with the capital and 
resolve to do so, can drive -down- a price position by selling, such that 
stop losses are triggered in succession, hence presenting an opportuntiy for 
the perpetrator -to be the acquiring party! Is it not conceivable that the 
seller is also the buyer?

IMO, the only good stop loss order is the 'mental stop loss' and a 'hot 
wire' to the market price. I for one would -Never- disclose my sell price 
[place a forward stop loss oder] prior to actually selling [in stosks]. 
Forces greater than mine are sure to capitalise on my vulnerability and 
naieve disclosure otherwise.

In options, where it moves quickly and in large %ages, a trailing stop loss 
has merit. In stocks, it's the lazy traders advertisement to cunning buyers 
with the wherewithall to create the price that allows them to acquire -your- 
stock.

Think about it.
BAA


>From: "Cristine Kerr" <criskerr@optusnet.com.au>
>Reply-To: sharechat@sharechat.co.nz
>To: <sharechat@sharechat.co.nz>
>Subject: Re: [sharechat] Short Selling Conditions
>Date: Thu, 25 Mar 2004 17:23:55 +1000
>
>Hi Karyn,
>
>Many thanks for your contribution.
>
>You've raised very valid points, especially regarding stop losses - I agree 
>with your observation.
>
>Regards,
>Cris
>   ----- Original Message -----
>   From: Karyn W
>   To: sharechat@sharechat.co.nz
>   Sent: Thursday, March 25, 2004 2:19 PM
>   Subject: [sharechat] Short Selling Conditions
>
>
>   Short selling doesnt have much effect on a market as there are VERY 
>strict
>   conditions placed on such sales by the stock market.  It is not 
>something
>   that everyone can do, even if they wanted to, unlike buying shares.
>   eg. only a limited number of companies can be short sold, only a small
>   percentage of their shares may be short sold in any one day, sales must
>   usually be settled within 3 days, requirements for margin cover, etc  
>...
>   for more detailed information see the ASX conditions at
>   http://www.asx.com.au/markets/l3/ShortSales_AM3.shtm
>
>   Automatic stop losses are a more potent tool to put a market into a
>   spiralling decline, and indeed has been given as the reason for the big 
>"one
>   day" market crashes that have occured - ie.  as the price falls,
>   pre-determined stop losses are triggered, the stock is sold 
>automatically
>   without human intervention, the increased volume of sellers pushes the 
>price
>   down, triggering more stop losses, and so on.
>
>   Now that people can set auto stop losses via online brokers, it will be
>   interesting if we see the same type of volatility in the Aust markets as 
>has
>   been seen in the US.
>
>   Karyn
>
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