Using Stops

Discussion in 'Stock Market Forum' started by Gazoo3000, Jun 4, 2016.

  1. Gazoo3000

    Gazoo3000 Active Member

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    How often do you use stops on your investments?
     
  2. baudwalk

    baudwalk Senior Investor

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    I'll use stops from to time on the 5-8% of the portfolio that I might consider speculative, especially if I'm travelling. But once something is up ~10% or more I don't use stops. I just let it run, and watch it, as I've done with recent buys of $FRO and $SFL. Otherwise I have the luxury of time to watch the investments. For Android, I absolutely love the app "Stocks--Realtime Stock Quotes" (https://play.google.com/store/apps/developer?id=uInvest+Studio) for the phone and tablet. The app retrieves realtime stock quotes determined by entries in one's portfolios and watchlists created in Google Finance (https://www.google.com/finance/portfolio). It is quick, very readable at a glance even on a smartphone mounted on a car windshield mount. About the only place I'm out of touch is in a plane, but we don't fly that much.
     
  3. Gazoo3000

    Gazoo3000 Active Member

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    What do you think of placing a stop at -1% of your entry point on all your positions? This way you never loose more than 1% on any stock.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I'm not big on stops overall, but I will occasionally use pretty wide stops for more volatile, speculative positions in certain circumstances.

    Personally, I'd not use a 1% stop on my own picks. I generally like to buy more of a good investment as it gets cheaper as long as the fundamentals are there. And on the odd occasion I use a stop, it's going to be on something pretty volatile that is likely bouncing back and forth a few percentage points as it is hopefully rapidly climbing upward (or hopefully falling downward if I'm short).
     
  5. admin

    admin Administrator Staff Member

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    I normally use stops on most trades when day trading especially if i set up my trades in the morning and let them run with out monitoring and im relying on my set take profits and stop losses, mainly on indices or currency's during volatile time ( such as USD/JPY or similar ).

    If im still around when my position turns green ill often move my stop to as high as I can to prevent loss incase the trader doesnt quite reach my take profit and rebounds.
     
  6. baudwalk

    baudwalk Senior Investor

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    Gazoo, if you are thinking of a trailing stop I would venture a guess that a -1% stop would have a high probability of (1) bouncing you out of a holding within a day or two and (2) churning your account leading to many transaction fees. I found a Google spreadsheet (unfortunately not on the web anymore) that gave me an idea how to calculate stop loss numbers. I modified it to give me standard deviation and percentage numbers and 3- and 5-day averages. Even with my conservative holdings, the closest stop I ever would consider was 3%. (If I can figure out how to export and share a Google spreadsheet that includes formulas, I would be happy to share it.)
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    If you're doing the frequent scalping-type trades where you're trying to get in and out of positions fairly quickly and frequently throughout the day with small profits and trying to keep losses small, tight stops such as 1% or less are probably necessary.

    I'm always trying to get a double digit (or perhaps more on occasion) profit if possible before reducing my position or getting out entirely. This means that I often have to be at least a little patient (days, weeks, sometimes months or even longer), and that I am putting at least some of my money into more volatile securities. It also means I will take a double digit loss on occasion, which is why I'm big on diversification.

    When I have a position go against me 5-10% or more, I can hopefully quickly learn why. From there, it's either: 1) buy more if the fundamentals are still there; or occasionally 2) sell some or all of my position and move on when the reason it sold off points to serious trouble ahead that is likely to make the stock continue downward (or worse).
     
  8. Gazoo3000

    Gazoo3000 Active Member

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    Yes, being bounced out of the trade is my concern here.

    So, you are looking at the 3 and 5 day averages to calculate what is a set of realistic stops without being prematurely put out of the trade, correct?

     
  9. baudwalk

    baudwalk Senior Investor

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    Gazoo, the original spreadsheet looked at one day moves to calculate 1 and 2 SD. I added percentages of 1, 3, 5, 7 and 10%, later added moving average 3- and 5-day percentages. For grins, thinking about your spreadsheet questions, after posting the last message I looked on the web for stop loss (and portfolio) spreadsheets. There are a number of them out there for both Google and Excel. You should find something that gives you a starting point as an idea then let your mind run wild.

    I've been using spreadsheets since VisiCalc in 1979, wrote a business management review on about 25 of them in 1986 and ran a user group for years c.1990. Building spreadsheets is ingrained now, and I think of it as a jigsaw puzzle.

    My advice is to test your IF, AND, OR, ISBLANK et al logic step by step. Don't try to write a complicated formula at once. Test the interior logical expressions before folding them into longer formulas. Make use of the $ cell reference to lock row or column (or both) when copying formulas.
     

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