How to Track Your Stop Losses
Stop Losses
Beginning toward the end of February of this coming year, stop losses limit order allowed by brokerage firms will cease. Well those that are traded on the NYSE will be affected, not sure how the new rules will work with trades over the Nasdaq and American Stock Exchanges.
Last week the NYSE announced it will no longer accept stop orders—instructions to sell or buy a stock once it reaches a certain price.
The change follows erratic swings on August 24, which triggered many stop-losses—to investors’ detriment.
The reasoning NYSE has taken this step is the fact that a lot of investors use stop orders thinking it’s an insurance policy. The perception is they limit losses, and that’s just not the case,” and in many cases this has not been true.
Days that have seen wide swings in share prices, triggered stop loss limits and found that later in that trading day the price per share recovered. Prices rallied sharply off the lows as the morning went on. therefore, some investors sold at rock-bottom prices that existed only momentarily, missing the recovery that arrived mere minutes or hours later.
Action Alerts PLUS: Jim Cramer & Jack Mohr from Katie Miller on Vimeo.
So what are the alternatives?
Tracking your own stop loss price movement is fairly easy, just use a spreadsheet or software application that is readily available for tracking alerts; once triggered you can place a sell order with your broker.
Personally I use an online tracking service that tracks multiple portfolios called TradeStop. You can find the service at TradeStops. This tracking service isn’t free but has many features you will find beneficial.
The reality is you should have been tracking your own stop losses all along as it is a bad idea to place stop loss limit orders directly with your broker and especially intraday alerts. When you place an order directly with the brokerage firm, you are showing your hand and executing orders that should have never been traded.
Financial Quote of the Week –
If we get our self-esteem from superficial places, from our popularity, appearance, business success, financial situation, health, any of these, we will be disappointed, because no one can guarantee that we’ll have them tomorrow.
Kathy Ireland
Daniel F. Iuculano, AAMS CMFC
Accredited Asset Management Specialist
Chartered Mutual Fund Counselor
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