| A stop loss order is simply a trailing
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| | stock seems to travel in and it falls out
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| "safety net" that you can attach to a
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| | of that range, who knows where the bottom
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| stock buy. The purpose of a stop loss
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| | might be. A stop loss order will sell you
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| order isto keep you from being "trapped"
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| | out at a loss for sure, but it will save
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| in a stock that falls a ton of points. It
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| | you from the nightmare of coming home to
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| is all done electronically and it is both
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| | find your stock got slammed and now you
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| easy touse and quite mandatory in our
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| | own it but it's down 30 points.
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| opinion.
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| | Now for some things that a stop loss
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| Many times you will hear ..Know your exit
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| | order will not solve.. first if your
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| before you go in. On the downside though.
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| | company announces something bad before
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| For instance there are going to be times
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| | the bell and it gaps down 15 points on
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| when you make a trade and it goes against
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| | the open, your order will fire, but it
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| you. That is normal and it happens to
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| | will sell you out at that low. Sometimes
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| every trader. The difference is that if
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| | in that instance it is better to cancel
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| your trade was fundamentally flawed (you
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| | your stop loss and hope that it rebounds.
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| bought a stock thinking it would make a
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| | ( the thinking is like this, the order
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| short term run but it fizzled out
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| | couldn't save you, so since you have two
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| instead) you should have a set
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| | choices sell it at that low or hold it
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| predetermined price that you will let
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| | hoping for some type of nice rebound,
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| that stock fall to and you are out.
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| | often its better to hold it.)
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| For instance lets say we think the XYZ
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| | Another problem is that if a company
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| company is going to fly because of a hot
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| | starts to tank real hard your stop may
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| news release and we buy 500 shares. but
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| | get "run through" or in other words stop
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| almost instantly the thing starts backing
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| | loss orders are basically market orders
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| up and soon we are down a couple points.
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| | to sell and if the stock is moving down
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| Do you hold or do you sell? Since we were
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| | quickly if the order to sell was at 96,
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| looking for a run up over the news, and
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| | it might fall all the way to 94 before
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| it was greeted with selling it was
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| | you get filled.
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| probably best in this instance to sell
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| | There always will be a battle between
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| out and take our loss and move on to a
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| | simply holding on to a stock and hoping
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| winning trade. But what if you buy a
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| | to recover your losses with time,versus
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| great company and because of market
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| | stopping out and taking a quick loss. It
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| conditions or whatever, you are faced
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| | probably best to keep pretty tight stops
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| with your stock falling on you? That is
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| | on and take small losses along the way as
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| where stop loss orders come in.
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| | we trade and gain profits on ones that
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| Let's say we bought into XYZ and XYZ was
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| | move for us.
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| a great company . We think that it has
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| | One thing not advocated is having a
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| the ability to go for many points and
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| | predetermined "sell point" on the upside.
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| history shows us that it already has in
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| | For instance if we buy XYZ and it goes up
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| the past. So we buy it BUT we attach a
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| | for us 4 points today, sure we could take
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| "stop loss order" to it. What that means
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| | our profit and go, but instead we simply
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| is that we are going to tell the broker
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| | like to move our stop loss up closer to
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| just exactly how far we are going to let
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| | its new level. This way if it falls back
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| XYZ fall before we sell and take our
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| | we will get stopped out but we will still
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| loss. Let's assume XYZ is selling for 100
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| | have a nice profit, but if it continues
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| dollars a share and we know that it often
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| | up we will simply keep moving the stop
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| bounces up and down about 2- 3 points in
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| | up. There is no limit to how many times
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| a normal days range. We might want to
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| | you can move a stop loss order and we
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| tell the brokerage that we would like to
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| | often will move the point up on an hourly
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| sell out at say ..96 dollars per share if
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| | basis if the stock is moving up well.
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| it falls that far.
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| | Let's say XYZ was 100 and we had a 96
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| That is a stop loss order and it is
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| | dollar stop loss on it. Now XYZ goes to
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| attached to your account electronically.
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| | 104 today. We simply move our stop up to
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| They will ask if you want that order good
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| | say 102. Now if it goes to 106 we in turn
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| forthe day, or good till cancel which
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| | go to a stop of 104, etc.. This way we
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| simply means do you want the sale to fire
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| | can still capture a lot of upside as it
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| off if the stock hits 96 dollars today
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| | keeps growing.
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| only, or for the next 60 days (that is
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| | I know how hard it is to watch a stock
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| about the range of a good til cancel
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| | get "stopped out" only to rebound a few
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| order). Let's say we tell them it's a
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| | days later, but sometimes its a long way
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| "GTC". So from the time you bought XYZ ,
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| | down before they stop falling. Stops
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| and for the next 60 days or so if XYZ
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| | really do work, and after "crunching "
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| falls to 96 or lower it will trigger your
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| | the numbers of getting stopped out versus
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| sell program and you will take your loss.
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| | the risks of holding on ...getting
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| The use of stops on every trade is
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| | stopped out makes more monetary sense as
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| suggested. The reason is quite simple. If
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| | far as having cash to trade with.
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| you know the "average" daily range a
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