Stock Markets Exposed
Advice for stop loss when actively trading stocks?
At what percentage should a stop loss should be put on a specific stock?
Public Comments
- There's no set rule for setting stop losses. If you go with the standard 8%, then chances are in today's market that you will get stopped out often. Look at the individual stock's volitility. Leave a little more room for the more volatile stocks. ///
- I would not personally use stop losses.. I do setup alerts at support points if the stock is pulling back, and I then go check to see if the support has been broken and make a decision at that point. I am a chartist (technical analyst trader).. I look for support and resistance, moving averages, patterns that I can make money off a move up or down in a particular stock. But, if you don't use technicals to make your decision, then you can still use Parabolic SAR. This is an indicator that keeps a pretty lazy stop loss. Follow the link below to track a stock that I use it with.. When the dots move above the price range of the chart, it is generally a good time to short the stock as it will go lower.. As long as you put your stop loss at the value of the SAR on a daily basis.. it should allow you to trap any gain, or at least keep you from loosing a lot on the stock. You can also use other indicators as well. But the SAR gives you a clear point to set your stop loss at mentally, and you can sell it when your stock price moves through that point. There are many good technical books out there.. One that I can recommend for you to read is Entry and Exits.. Links are supplied below..
- 40% if you have over $10,000,000.00 20% if you have over $1,000,000.00 10% if you have over $100,000.00 5% if you have over $10,000.00 2.5% if you have over $1,000.00
- I actually prefer trailing stops to stop losses at they will trail as the price of the share goes up. The percentage you chose is different from investor to investor but typically what i like to do is look at the volitality of the stock and add a couple of percent to this to try and avoid the stop from bieng execute prematurely. so if i buy a stock at 30 and it seem to consistently trade between a 3 dollar range i will notice that the stock can give or take 10% at any given time therefore I would at probably 2 or 3% on to this so I would set a trailing stop or a stop at about 12 or 13%
- I incorporate both of the first 2 answers...I also use technical analysis and never have an initial mental stop of over 7%. I will identify a recent support level on a chart I like and see if a 7% pullback would be triggered before the stock hits the support. If so, I will not buy that particular stock. Example: I like stock XYZ at $100. A 7% stop loss will give me a stop price of $93. If recent support is at $95, I will buy it, but if recent support is below $93, I look for something else. However, using this example, I would sell the stock as soon as it broke the support level of $95 and not wait for the 7% stop loss. I usually only trade 4 stocks at a time, so in doing that, I am never risking more than 1.75% of my portfolio value on a single stock (7% stop loss divided by 4 stocks = 1.75% of portfolio value.
- The old 8% is a good starting idea, but, yes it does depend on the stock's volatility. I, also, am a chartist and total technician, so I never buy a stock without examining its charts over several different time frames to get an idea of its normal movement. But the BIG THING about stops is, in my mind, to always always use them and to put them in place as soon as your purchase is confirmed. Don't wait until after dinner or tomorrow. Do it right now, with the charts on the screen. Pilots of experimental aircraft are required to wear parachutes, just in case something doesn't work out. Ditto stocks.
