A Long Investor Needs A Stop Order Advice!! Messages 1 - 25 Of 27 In Discussion Newer >>
Q: I have got around 6000 BAC stocks and around 3000 C stocks . I am dealing with stocks for last 3 months or so. And its value is almost UP by 60-70% as of today. I usually try to put stop orders of around 10% lesser than the previous end of Day price. Eventhough I try to monitor these stocks tickers from my workplace, I can not do regular day trading ( though I can buy or sell once or twice) from work. Now I have got burnt a few times because of my stop orders because of highly volatile hack saw day pattern of these 2 stocks. On last Friday , I had stop order of 3.62 for C stocks. And unfortunately all of them got Sold at this price. And out of panic, I bought them back at around 3.85 or so. I did not have enough patience to wait until the price drops little lower. This has happened quite a few times in past. Well, I have enough confidence in BAC and C stocks for the growth and so, I want to play this LONG only. But at the same time, I feel a need to keep Stop orders also because I am using Margin account. In case something drastic happens, I can probably minimize my losses. In that case, is it a better idea to keep stop order much lesser like around 30 % lower prior to previous day's close price so that there is a very little chance of it being executed during the day?? And as usual, the price might jump back from the day's low! Like on Friday , C reached to 3.60 but came back up to 3.65 at the close. If I had not put stop orders for any of these stocks so far, my portfolio would have probably more than doubled by this time. Does it mean an investor with LONG intentions should NOT put stop orders?? Any advice from the LONGS would be gr8ly appreciated!!!
A: Thanks for such a quick response Kerry and Joshua!! Kerry I wish, I had put this question on the board when I started playing the stocks market in Jan 09. I liked ur advice of putting my stop orders just above my buying average price Or around 30-40 % lower in these volatile but rewarding stocks. That way, I get back at least something in case there is a sudden crash or something. Jashua, this was the reason why I put the stops because I am not only playing on full Margin for BAC , I have also borrowed some money from my Credit line. Brent, I agree, traders rule and make money by playing with UPs and DOWNs of every day markets. But you need to put lots of time in front of ur online trading screen during the day time for this. And It;s not possible for me because I have got some other full time job. But I still want to take advantage of the current Low values in stocks. Well, I don't know how to say it. Use margin or line of credit to long on stock, is it a smart investing technique or not? Who knows? Use margin or line of credit to trade on stock is a convenient way to boost your profit without ending up huge interest & fee, if you long on stock. I put a STOP LIMIT to protect my profit, but I didn't put a STOP LIMIT to limit my loss during January, February, & early March. It was a fatal financial mistake I had made in the past. 10% or 30% STOP order does mean anything if the stock goes under water next day. Last year I bought WAMU on Friday (couldn't remember exactly), on Saturday it was declared giving away to JPM by Gov't. on next Monday all shareholders were wiped out. My personal opinion is that, it is no worth to borrow money to long on stock. and if you long, no need to put a STOP. because you trust what you've invested. Put STOP order if you are day trading so you can protect your profit or cut your loss. Good luck buddy You are smarter than me. I haven't used margin for longer than 2 days, and used only once for a while when I thought .....1) potential going up stock in next day,...............2) to average down the beaten down stock I owned, hoped it would bottom up next day. sounds silly. sometime it worked, but most time it did not.............I do not have any stock now, why am I in this board? Possible I am addicting to raeding you guys writings here. BAC is the most active board in Goodle finance. Good luck everybody, happy trading.