Quote:
Originally Posted by 44Apple
Do you tend to use stop loss orders?
I'm thinking of listing one for each of my etfs at the 10% loss point.
Seems like a holding could drop 10%, be automatically sold and then rebound the next day/week by a quick 8% or so and then I would be missing the rebound.
Thoughts?
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Yes, that is exactly correct.
So I would not set a stop loss as small as 10%. I personally use 20%. Some people I know use 15%. But yes, you could lock in a loss and then miss the rebound.
And be sure to reset your stop loss higher as the stock goes up in price to maintain your 10%. That is called a trailing stock loss. You reset it higher as the stock goes up, but you do not ever reduce it.
I stopped using stops. Instead, I choose stocks that I feel have good long term prospects, are well managed, and their dividend is well funded by current operations. I buy them when the price looks good, and then hold on long term. But I still watch over them, about once or twice every 3 months.
Do not be concerned with daily ups and downs. If you are, and cannot tolerate a 10% dip, perhaps stocks are not for you.