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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: J. C. Dithers who wrote (17978)	11/28/1998 12:10:00 PM
From: kendall harmon	Read Replies (4) \| Respond to of 119973

In RE: "stop-loss trickery" J.C. this kind of thing happens all the time and reveals the risk of using stops, especially in a fast market. What you need to realize is that actual stops are posted which means market makers see them so, yes, one of the things that does happen is that there is a deliberate price drop in order for these stops to be hit so people who want to can accumulate shares. The reality is that in the current environment market makers LOVE active daytraders, esepcially ones who do this. There are two responses you can make: (1) Do not use actual stops, but use mental stops. The good news on this is that your stop will not be seen and therefore you may avoid getting hit in a period of short term selling. The bad news is that you are then entirely dependent on your own mental toughness actually to sell. Also, because of market conditions you may not get as good a price if you do this--I advocate always using a market order to sell in these conditions. (2) You can force yourself to use actual stops as you have been doing, in which case during "headfakes" you may get stopped out. You then simply need to accept this as part of the cost of using this approach. There are no simple answers in this "game" and there is nothing without a cost. BTW, if you want a good example of a shakeout, check out the action in NAVR between about 9:45 and 10:15 a.m. on Friday. A lot of daytraders bought NAVR in the 9's and put in stops in the high 8's and the stock went through a shakeout down to 8 1/2 during which market makers were accumulating like mad all the way down. You could see this if you were watching on level 2 since most of the sells were small and many of the buys were quite sizable.