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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: JSLyons who wrote (17192)	10/30/2001 9:23:40 AM
From: LemonHead	Respond to of 18928

As for your first point -- blowing through the stops -- I don't see any way around that. With the volatility we want in AIM stocks, this could pose a serious problem. Jonathan, it is possible to prevent a price from blowing through with the use of a Stop Limit Order verses a regular Stop Order. From Waterhouse: 4. What is a stop limit order? A sell stop limit order is an order placed below the current market price and will be triggered if the stock reaches at or below the stop price. Once a sell stop limit order is triggered, your order will become a limit order. For an OTC stock, a sell stop limit order is triggered on the bid price. For a NYSE or AMEX stock, a sell stop limit order is triggered by the last trade. If a sell stop limit order is placed above the current market of the stock, it will not be accepted by the exchanges and will be canceled. Sell stop limit orders cannot be placed on bulletin board stocks. Additionally, all or none restrictions cannot be placed on sell stop limit orders. Odd lot orders will be accepted. A buy stop limit order is an order placed above the current market price and will be triggered if the stock reaches at or above the stop price. Once a buy stop limit order is triggered, your order will become a limit order. For an OTC stock, a buy stop limit order is triggered on the ask price. For a NYSE or AMEX stock, a buy stop limit order is triggered by the last trade. If a buy stop limit order is placed below the current market price of the stock, it will not be accepted by the exchanges and will be cancelled. A buy stop limit order cannot be placed on a bulletin board stock. Additionally, all or none restrictions cannot be placed on buy stop limit orders. Odd lot orders will be accepted. More info: sec.gov cyberinvest.com individualinvestor.com [Snip] This is where a stop limit order comes in. Setting a stop limit order protects you from selling into a drastic drop in your stock even though you have a stop order. A stop limit order limits the price at which the stop order will be executed and prevents you from automatically sell into a temporary, exaggerated drop in your stock's price. A stop limit order can be at set at any price at or below the stop order price. Let's look back to our example. Say I set a stop order at $90 and also set a stop limit order at $90. My stock closes at $91 but opens at $50 the next day. What happens? Instead of selling the stock at $50, the stop limit order prevents the sale and I still own the stock. The negative side of stop limit orders is the limited control you have over analyzing whether or not the event that causes a gap down is an overexaggeration. In some situations you want to get out of a position at the first available market price after a gap down, but in others the stock will recover quickly as less emotional traders recognize the stock has become oversold. The lesson? Use stop limit orders wisely. And remember, your broker shouldn't charge you any extra to place either one of these orders. ccstrade.com The way I read this is that the order can only trigger at the limit. So if the price should drop below the limit price over night, then you would still have your shares. FWIW Keith