Stop Loss Trigger

[torsim]

Hi all,

I posted a "I am in desperate need for help" thread a couple months back and after making my way through all the material...I finally jumped into the deep end and and bought my lot of stock.

ILU (@9.832... now @9.280) and BLY (@1.155... now @1.405)

I got ILU just before the mid year report was released but unfortunately I missed the sell and now waiting for it to climb back up. Ended up selling about half for a loss and bought into BLY when it was rock bottom. Luckily, I managed to get BLY on the way up. Overall... I am still down roughly $40 odd but hey I am still learning.

I am looking for some help in setting up Stop Loss Order for BLY, I want to lock in the profits if it should happen to fall. Currently I have set a stop loss trigger at 1.340 and have the sell order at 1.330. Seeing as I have never set a stop loss order before, Can I get some thoughts? Have I done the right thing?

Thanks in Advance
torsim

 

[skc]

I am looking for some help in setting up Stop Loss Order for BLY, I want to lock in the profits if it should happen to fall. Currently I have set a stop loss trigger at 1.340 and have the sell order at 1.330. Seeing as I have never set a stop loss order before, Can I get some thoughts? Have I done the right thing?

Thanks in Advance
torsim

Congrats on making a start.

The stop loss order you mentioned will release an order to sell BLY @ $1.33 once it trades at $1.34. This should mean you sell at somewhere between the $1.33/$1.34 in most circumstances.

However, if something dramatic happens (say BLY issue further downgrade and opened at $1.30), your sell order of $1.33 may never get filled. This is a risk you need to consider.

If you mention which trading platform / broker you are using, others who are familiar to that may be able to tell you more details, and make sure you have the actual trigger etc set up properly.

 

[torsim]

Congrats on making a start.

The stop loss order you mentioned will release an order to sell BLY @ $1.33 once it trades at $1.34. This should mean you sell at somewhere between the $1.33/$1.34 in most circumstances.

However, if something dramatic happens (say BLY issue further downgrade and opened at $1.30), your sell order of $1.33 may never get filled. This is a risk you need to consider. .

Thanks, With real money on the line...It has made me much closer attention to news that could possibly affect my stock and with that I will learn much more!

So if it opens under my trigger then my sell order would even get 'triggered'?
Or would it just begin as it is lower than my trigger at $1.34, sell order would just start at $1.33 but as you say... chance it may not get filled?

If you mention which trading platform / broker you are using, others who are familiar to that may be able to tell you more details, and make sure you have the actual trigger etc set up properly.

I should have mentioned it on my OP... I am using CommSec.
Had to take advantage of the $600 free brokerage, especially since I am only starting out with a small amount.


Also, I am wondering what is a suitable amount/ percentage to place a "Stop Loss" order at? Do you frequently amend this figure when the stock is doing well?

 

[Tendril]

With Commsec is it possible to put up a conditional falling sell order that will sell at market?

So, for example, is it possible for set a trigger for those BLY @ 1.33 and have it set to just sell at market once it hits 1.33? So if there's no depth in the buyer's that it will still sell but only at a lower price? Or do you have to specify a sale price?

I'd love to know more about this!

 

[torsim]

With Commsec is it possible to put up a conditional falling sell order that will sell at market?

So, for example, is it possible for set a trigger for those BLY @ 1.33 and have it set to just sell at market once it hits 1.33? So if there's no depth in the buyer's that it will still sell but only at a lower price? Or do you have to specify a sale price?

I'd love to know more about this!

I just had a look myself, and it seems that you can't set it at market price. You can only set at a minimum price and number of shares you opting to sell... This is after the trigger is well triggered. And there from my understanding... Depending on the rate of fall, there is a chance it wouldn't all sell.

So back to my OP... How do you determine an appropriate stop loss order? Or is this more or less determined opened to each individual?

 

[skc]

So back to my OP... How do you determine an appropriate stop loss order? Or is this more or less determined opened to each individual?

That's a millions dollar question. Stop placement is one of the most influencial variables to your trading performance. There are no simple answers, but factors to consider such as your trading timeframe, how large a move you trying to catch, is the stock proned to gaps, wide spreads or low liquidity etc etc.

 

[pixel]

I no longer use Commsec, but from memory, trigger and sell order are independent.
So, you could set the trigger for BLY to "if it trades trade at or below $1.34", then specify the order as "sell 4000 BLY at $1.00". In that case, if there are not enough bids at $1.34 or down to $1.30, you are sure to be stopped out. 4000 BLY may be a bad example, seeing that the market depth is pretty well stocked and you'd get your lot sold rather close to the trigger; but if you were "accidentally" holding too many shares of a thinly-traded stock, it may be preferable to drop half a bundle than falling completely off the cliff.

Do you frequently amend this figure when the stock is doing well?

When the stock moves up, I apply a trailing stop, which I may adjust - only upwards - daily; in certain situations of fast-moving rallies, I adjust even several times a day. That way, I make sure that any short-term "paper profit" is protected and not eroded by more than I'm prepared to give back.

 

[tech/a]

That's a millions dollar question. Stop placement is one of the most influencial variables to your trading performance. There are no simple answers, but factors to consider such as your trading timeframe, how large a move you trying to catch, is the stock proned to gaps, wide spreads or low liquidity etc etc.

Back when I was designing a few systems I found the following.

(regardless of method of stop used)

3-8% from purchase price saw more stopped trades than any other and affected performance of the systems.
8-12% from purchase this was the sweet spot.
12%-24% from purchase price this was too wide and saw many trades wallow in the area between stop and purchase price.

So now even with my discretionary trading I aim at 5-10% max for my stop loss.
If a logical technical stop falls out side of this range to the top side I wont take the trade.
Lower than 8% and I realize that there is a high probability Ill be stopped but these are generally larger trades (As I use Fixed fractional position sizing) and I'm comfortable with the 1-2% capital loss--- the pay off is the larger potential R/R.

 

[notting]

(regardless of method of stop used)
3-8% from purchase price saw more stopped trades than any other and affected performance of the systems.
8-12% from purchase this was the sweet spot.
12%-24% from purchase price this was too wide and saw many trades wallow in the area between stop and purchase price.
So now even with my discretionary trading I aim at 5-10% max for my stop loss.
If a logical technical stop falls out side of this range to the top side I wont take the trade.
Lower than 8% and I realize that there is a high probability Ill be stopped but these are generally larger trades (As I use Fixed fractional position sizing) and I'm comfortable with the 1-2% capital loss--- the pay off is the larger potential R/R.

Great stuff
and good question.

 

[5oclock]

Great stuff
and good question.

Good answers +1 also

 

[torsim]

Brilliant.Thanks for all the feedback, it was most helpful

 

[Tendril]

Back when I was designing a few systems I found the following.

(regardless of method of stop used)

3-8% from purchase price saw more stopped trades than any other and affected performance of the systems.
8-12% from purchase this was the sweet spot.
12%-24% from purchase price this was too wide and saw many trades wallow in the area between stop and purchase price.

So now even with my discretionary trading I aim at 5-10% max for my stop loss.
If a logical technical stop falls out side of this range to the top side I wont take the trade.
Lower than 8% and I realize that there is a high probability Ill be stopped but these are generally larger trades (As I use Fixed fractional position sizing) and I'm comfortable with the 1-2% capital loss--- the pay off is the larger potential R/R.

Thanks for this, really helpful information!

 

[CanOz]

Perhaps someone could use a basic MA cross and do some testing since 2008...I'm thinking volatility has changed.....but perhaps the range in stop percent is wide enough to account for it:dunno: