Your Worst Trading Enemy.. You Message Board

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Strategies & Market Trends : Your Worst Trading Enemy.. You

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To: Steve Felix who wrote (52)	1/17/2001 10:56:00 AM
From: Fun-da-Mental#1	Read Replies (3) of 223

"small positions in $3 to $5 stocks" - yes, that's a case where stops may do more harm than good. Even more so for penny stocks. Because those stocks tend to drift down slowly and then suddenly spike up, it's hard to set a stop that won't be taken out. You can set it really low, get stopped out at a big loss, and then next thing you know the stock has doubled or more. This is not just a worst-case scenario, it's fairly normal. In these cases it may be better to set a limit order rather than a stop, and wait for it to be taken out. Or you could set a stop and a limit, but then it's pretty random which gets taken out first. Fun-da-Mental

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