Stop Loss Question

[wayneL]

Interesting post guys learn't a lot but I have a Q! why can't stop losses have a trigger and limit as a % of sp so that if the sp increases you stop loss order increases automatically I assume now if the sp was $2 and goes up say to $2.5 you have to manually adjust the trigger and limit yes/no!

cheers laurie

You can do that with some US online brokers... IB for e.g.

Not so sure in Aus

 

[pacer]

I never use them.....always win....hehe....fact not fiction!

 

[tech/a]

Interesting post guys learn't a lot but I have a Q! why can't stop losses have a trigger and limit as a % of sp so that if the sp increases you stop loss order increases automatically I assume now if the sp was $2 and goes up say to $2.5 you have to manually adjust the trigger and limit yes/no!

cheers laurie

Laurie.

Two distinctly different stops.

The Initial stop loss Set to deminish risk if a trade doesnt turn out as you had evaluated.

Trailing Stop (As you describe.)
Placed (often in correctly) as a stop to maximise a sharp gain in a stock.
Most who incorrectly use this stop minimise gains rather than maximise as it becomes their EXIT.Trailing stops should only be placed behind price action which has moved well beyond the normal profit parameters--in particular outlier moves.IE 30-50-100% gains in a few days.

 

[MichaelD]

I'm trying to make my very first stop loss order using Westpacs conditional order system.
AGS at close friday was $1.16 I entered a market condition @$1.08 & order details @$1.06

The user unfriendly system rejects with the following msg's
Market Conditions: Price is invalid.
Order Details: Price is invalid.

I use ComSec, so the names for things might be different, however;

1. Do you own AGS? Perhaps Westpac won't allow a conditional stop loss unless you actually own the stock.
2. Are you sure you are entering a Stop Loss instead of a different type of order, eg. a Buy Gain order? A Buy Gain at these numbers would be invalid.

 

[brerwallabi]

Interesting post guys learn't a lot but I have a Q! why can't stop losses have a trigger and limit as a % of sp so that if the sp increases you stop loss order increases automatically I assume now if the sp was $2 and goes up say to $2.5 you have to manually adjust the trigger and limit yes/no!

cheers laurie

Etrade does Laurie
If the stock price moves in an upward direction the Trailing Stop level is automatically recalculated at the end of every day and moves the trailing stop level up in line with the stock price. The order will trigger if the share price falls to the level of the Trailing Stop. So if you have your stop at 5% below the closing price it will always maintain the trigger price at 5% below.
In Etrade you can chose a % below yesterdays high, low or close and also have a limit.
There is no charge unless the order is executed, so you can manually change %'s as many times as you like.
If anybody is using Etrade I would be interested to hear from others on their strategy in selecting whether a low, high or close is the condition they use in their trailing stop and if they change from a close to a low the next day etc.

 

[laurie]

brerwallabi

Thanks for that

cheers laurie

 

[Out Too Soon]

Thanks MichaelD, yes it is a stop loss sale of shares I hold, the way I read it it should be straight forward. I've already posted my views on Commsec, I've seen other beginners having similar probs with Commsec on this forum.
I'll post again when I find out what the prob is.

 

[Out Too Soon]

Success! I had set prices right, Westpac couldn't suggest anything this morning except try again, could have been I only became eligible for conditional orders on friday after doing their 11 question exam.
Today I'm realising how a trailing stop loss could be so handy, with AGS sp shooting for the moon I have increased my stop loss a no. of times. The whole idea of the stop loss tho was to set it & leave it.
Does COmmsec have trailing stops??? is that the reason for thier higher charges????
A trailing stop is what I really need it seems for current rocket resources. Otherwise they're not much use.

 

[MichaelD]

Does COmmsec have trailing stops???

No - you need to adjust the trigger prices manually.

 

[Steve C]

Hi All,

Sorry for asking such a basic, silly question.

If I was to purchase $2000 worth of shares in XYZ at $1.00 per share, could I put in a conditional order to sell the shares at $0.98 or is this not possible due to being only able to sell $500 parcels meaning I would have to risk 25% of my capital not the 2% desired?

I have a feeling it's not possible, but I was just thinking someone who already has shares in XYZ could buy the shares sold by the stop loss executed at $0.98?

Again, apologies for such a basic question.

Cheers,

Steve

 

[Trembling Hand]

Hi All,

Sorry for asking such a basic, silly question.

If I was to purchase $2000 worth of shares in XYZ at $1.00 per share, could I put in a conditional order to sell the shares at $0.98 or is this not possible due to being only able to sell $500 parcels meaning I would have to risk 25% of my capital not the 2% desired?

I have a feeling it's not possible, but I was just thinking someone who already has shares in XYZ could buy the shares sold by the stop loss executed at $0.98?

Again, apologies for such a basic question.

Cheers,

Steve

You can sell any amount. The $500 min is for purchases.

Though I'm not sure what you are talking about with the "25% of my capital not the 2% desired"

 

[Steve C]

You can sell any amount. The $500 min is for purchases.

Though I'm not sure what you are talking about with the "25% of my capital not the 2% desired"

I guess I have confused myself... what I am asking is if I buy $1000 worth of shares at $1.00, can I use a stop loss that only risk's 2% of the capital? (if the stock hits $0.98) It will sell?. One of the other posters on here told me you can't do this becase you can only sell $500 parcels, so he was saying that I could only have a stop loss in this case when I have lost $500 (share price goes to 0.50c) as you can't sell less then that and that is why trading with such limited capital is a waste of time in terms of risk management?

 

[Trembling Hand]

I guess I have confused myself... what I am asking is if I buy $1000 worth of shares at $1.00, can I use a stop loss that only risk's 2% of the capital? (if the stock hits $0.98) It will sell?. One of the other posters on here told me you can't do this becase you can only sell $500 parcels, so he was saying that I could only have a stop loss in this case when I have lost $500 (share price goes to 0.50c) as you can't sell less then that and that is why trading with such limited capital is a waste of time in terms of risk management?

Ok lots wrong with the above.

You can sell any amount.

You wouldn't want a 2% move in a stock to be a stoploss. especially a $1.00 stock. Almost certainly to be tagged.

You aren't confusing the 2% of total capital with 2% move on the stock are you?

Some brokers will not accept conditional orders too close to the last traded price, but certainly not restrict you to having to lose 50% before a stop kicks in.

 

[Steve C]

Ok lots wrong with the above.

You can sell any amount.

You wouldn't want a 2% move in a stock to be a stoploss. especially a $1.00 stock. Almost certainly to be tagged.

You aren't confusing the 2% of total capital with 2% move on the stock are you?

Some brokers will not accept conditional orders too close to the last traded price, but certainly not restrict you to having to lose 50% before a stop kicks in.

Found it - This is the quote - can you confirm if this is correct Trembling Hand?

Hey guys don't want to spoil the party but starting to trade with $1500 is risky because you have to risk at minimum 1/3 of your trading account ($500 parcels). Many traders aim to risk around 2%-5% of their account per trade (so if the trade is bad and makes a loss it's no big deal). This means you should have around 10k to start with (500/0.05). That's just my 2 cents, i know people have been successful from small starts but I just want to point out that just because Buffet or Livermore hit it big that you will too.

 

[againsthegrain]

I guess I have confused myself... what I am asking is if I buy $1000 worth of shares at $1.00, can I use a stop loss that only risk's 2% of the capital? (if the stock hits $0.98) It will sell?. One of the other posters on here told me you can't do this becase you can only sell $500 parcels, so he was saying that I could only have a stop loss in this case when I have lost $500 (share price goes to 0.50c) as you can't sell less then that and that is why trading with such limited capital is a waste of time in terms of risk management?

you can buy a share at $1.00 and you can sell it the next minute for $0.99 however the minimum sell amount has to equal $500. so if you buy 1k and your 1k turns to $990 (if you sell at $0.99) you need to sell a minimum of $500 from that $990 at $0.99 for the order to be accepted.

If the order gets fully filled straight away is another question, you could have only $200 from the $500 filled and then cancel it but you pay brockerage fees, and depending on the volume of the share it would be pointless trying to guess what orders will get filled.

at 1k this exercise is pointless, even if you have the cheapest broker which is cmcmarkets i believe $9.95 per trade, you are already spending 2 x 9.95 to sell and buy.

If you are playing with 50k or 100k then those % reflect different on the $ value

Personally when I will gamble with 1k I will throw it on some dirty undervalued speccy and look for 20% - 50% gains or only think about selling after similar loses, otherwise you are only chasing $10 $20 or $50 each way.

Putting around 10k on a share then you start to think more about stop losses etc, but im sure there are guys who gamble with 10k on specs just as I will do with 1k.

 

[CanOz]

Can't imagine why you need to trade $500 parcels...in 7 years of trading equities I've never had to do that....ever.

Something to consider - Fixed Fractional Positioning

Example You have $10000 in capital. You only want to risk 1% on each trade. Thats $100.00

You see a stock that meets your system criteria, you want to buy on a break of 1.05, so 1.06. You see support at 1.00. You place an initial stop at .98. Your trade risk is .08

$100 / .08 = 1250. You purchase 1250 shares at 1.06 for $1325 Your stop gets hit and you sell them for $1225. You lose $100, exactly 1% of your capital.

Cheers,


CanOz

 

[Steve C]

you can buy a share at $1.00 and you can sell it the next minute for $0.99 however the minimum sell amount has to equal $500. so if you buy 1k and your 1k turns to $990 (if you sell at $0.99) you need to sell a minimum of $500 from that $990 at $0.99 for the order to be accepted.

If the order gets fully filled straight away is another question, you could have only $200 from the $500 filled and then cancel it but you pay brockerage fees, and depending on the volume of the share it would be pointless trying to guess what orders will get filled.

at 1k this exercise is pointless, even if you have the cheapest broker which is cmcmarkets i believe $9.95 per trade, you are already spending 2 x 9.95 to sell and buy.

If you are playing with 50k or 100k then those % reflect different on the $ value

Personally when I will gamble with 1k I will throw it on some dirty undervalued speccy and look for 20% - 50% gains or only think about selling after similar loses, otherwise you are only chasing $10 $20 or $50 each way.

Putting around 10k on a share then you start to think more about stop losses etc, but im sure there are guys who gamble with 10k on specs just as I will do with 1k.

Thanks for the explanation - I was going to start out with $2k and use Radge's theory of minimise your loss (2-5%) and maximise your profits whilst learning about the market... I guess a stop loss with $2k invested is pointless though.

Cheers

 

[Steve C]

Can't imagine why you need to trade $500 parcels...in 7 years of trading equities I've never had to do that....ever.

Something to consider - Fixed Fractional Positioning

Example You have $10000 in capital. You only want to risk 1% on each trade. Thats $100.00

You see a stock that meets your system criteria, you want to buy on a break of 1.05, so 1.06. You see support at 1.00. You place an initial stop at .98. Your trade risk is .08

$100 / .08 = 1250. You purchase 1250 shares at 1.06 for $1325 Your stop gets hit and you sell them for $1225. You lose $100, exactly 1% of your capital.

Cheers,


CanOz

Thanks Canoz - well now I am really confused! Time to do some more reading...

So if I was to invest $1000 for example in XYZ can I use a stop loss to risk only $50?

 

[CanOz]

Thanks Canoz - well now I am really confused! Time to do some more reading...

Just work through some practical examples. If you are pattern trading then this is the way to go IMO. The great ting about it is that it takes into consideration the size of your account, your always only risking 1% of capital.

CanOz

Heres a simple calculator:

 

[againsthegrain]

Just work through some practical examples. If you are pattern trading then this is the way to go IMO. The great ting about it is that it takes into consideration the size of your account, your always only risking 1% of capital.


CanOz

So if I was to invest $1000 for example in XYZ can I use a stop loss to risk only $50?

Not sure what you mean exactly risk $50 but you can risk $50 in a sense that as soon as your 1k turns to $950 your stop loss sells everything. Ofcourse you are risking more then $50 after your brockerage fees.