Steve: You're totally correct. The reason I prefer a stop-loss order with a limit specified is that I've been burnt too many times on a gap-down open followed by a quick reversal, or, a suddenly thin market.
Agreed, many people would prefer to be out at any price in a gap-down situation, since they feel the fall will only get worse. Personally, I'll take my lumps (sit with the unexecuted limit order out of market range), then assess the situation and reason for the drop, then take action.
For example, with RIM right now, I might place a stop-loss at C$38.85, but with a limit of $37.50. In an orderly descent, I'll get taken out near $38.85, but in a gap-down open of $32.00, I'll still be holding. Then of course, that'll never happen with RIMMMMMMMMM -- THE POWERHOUSE!
S/S |
