Coyoti, I disagree with you on NASDAQ stop-loss orders for novice investors and traders. I have been trading actively for the past year. My gains and losses have been about equal, which a beginner has to accept. It's part of the learning curve.
How could I have done better? By taking paper profits before a stock turned. Unsophisticated investors are just learning which stocks are volatile and which are stable, and why. They may or may not have any acquaintance with TA. Stop-loss orders protect them from their own poor judgment by getting them out of losing trades and locking in profits when a winning position starts to go the other way and THEY JUST CAN'T BELIEVE THIS STOCK WHICH HAS DONE SO WELL AND THEY LIKE SO MUCH WON'T BOUNCE BACK REAL SOON.
Most of the time, the position doesn't turn back in their favor. Of all the stop loss orders I have had triggered in the past year, I'd say 80-90% saved me further losses or locked in profits. I could give you the list of which stocks and when if anyone finds it instructive. A random sample includes QNTM, WDC, BNGO, BNGOW, DELL, GOTK, etc. Stop-loss orders MAKE you stick to your system.
Yes, MM's can reach down and pluck stop-loss orders when they are playing with a stock. Overall, however, I think it's better for neophytes to go out hunting with a good flak jacket on. They also offer protection for traders who can't watch the tape all day, every day.
Just one point of view. I'd be interested in Steve's views on investors who don't have a broker to advise them when to bail.
Keep up the interesting thread everybody. |
