It is tough to pick a good stop Wayne, and I have had a lot of trouble also. A lot of times, you think you are safe with your STOP only to get it activated on a temporary dip. I have seen the Market Depth run downward so quickly, as other STOPS are hit one after the other. It is usually a few seconds depend on how much it is trading that day. Definitely, it happens too fast to react to.
I am beginning to believe that I would rather have a really tight stop a lot of times (less than a nickel behind the trading), when I am at the point where the trade has already netted me 10-20%. Of course, these decisions are always tough ones, but I would rather be in the money and accidentally get a stop hit than cost me money. Hindsight is always 20/20.
Use the depth, and find a spot to tuck in your STOP LOSS. For example, tuck it under a large BID or over it if you want. If a stock is trading at 75, then 69 cents might be a good STOP because 70 cents can be a resistance point. Same goes for breaking over a dollar, which could have the stop placed at 99 cents, etc....
As you mention, this is somewhat subjective and can vary greatly from trade to trade.
Regards, Wisam |
