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Stop Loss - How do I do this? :(

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Frankieplus

Joined
4 April 2014
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Hi everyone,

I've just started using stop loss to automatically sell and am confused.

I just bought APT shares and want to automatically sell 625 units when the price drops down to $24.68. This is all I want to do what can be so hard about that?

Anyway it seems that with Bell Direct I must set a limit price, which means that I could potentially miss out on the sale if the price gaps through my limit price.

So I put my limit price at 3 cents lower than my sale price. Is 3 cents enough? Could someone recommend what I should do to ensure that I don't miss out on selling my stock when it drops down to $24.68?

Here is a screenshot of a conditional order I placed with Bell Direct.



Click on it to view.


Thank you


-Frank
 
Everything looks fine. 3 cents should be enough. APT has plenty of volume.
 
If it gaps below your trigger price, your broker will sell at the open (or re-open if intraday). That may be well below your trigger price.

To ensure a sale when the price hasn't gapped, consider the size of your holdings versus the typical spread and typical bid volume in the top 3 lines. APT typically has a 1c spread and about 300 shares total. So I agree, 3 cents should be ok unless your holdings are over $10000. If you're holdings are say $100,000 then there's not much point having an automated stop. Set an alert instead then wait for the closing auction when you will have a chance of selling without pushing the price up too much.
 
Gringotts Bank said:
Set an alert instead then wait for the closing auction when you will have a chance of selling without pushing the price up too much.
Click to expand...

What do you men closing Auction? Sorry I'm a newbie.

My shares were around $18,000. I purchased 675 shares. Price is currently $26.14 , I want to ensure a sale if the price drops to 24.68

Are you suggesting in this case it's best not to bother with sell triggers and just set an alert and sell them myself?

But how do you mean 'wait for closing auction'?


-Frank
 
675 shares you should be able to sell fairly easily with a conditional order. Closing auction - plenty on Google to explain.
 
Gringotts Bank said:
675 shares you should be able to sell fairly easily with a conditional order
Click to expand...

So you say 675 shares at around $18k total isn't enough of a concern to push prices? Sorry if this is a dumb question but I don't know how what the norm is or whats considered a large amount of shares to buy in a company.

Gringotts Bank said:
675 shares you should be able to sell fairly easily with a conditional order. Closing auction - plenty on Google to explain.
Click to expand...

Will have a look and learn about all this.. Thanks.


-Frank
 
Frankieplus said:
So you say 675 shares at around $18k total isn't enough of a concern to push prices? Sorry if this is a dumb question but I don't know how what the norm is or whats considered a large amount of shares to buy in a company.

-Frank
Click to expand...

If you're investing longer term, you don't have to worry too much.

If you're trading in and out, then you have to be able to make your transactions without affecting the price too much. In practice, this might mean not buying more than the volume offered on the top line of sellers, because at some point you're going to have to offload them.

So you can see there's no such thing as a normal or usual amount to buy or sell.
 
Hi Frankie, I don't use market set stop losses these days and if I do it's very rare. But when I first started it was probably the most essential tool. That's because it helps to control emotions. When you are new it's best to let the market close the trade if it even touches the price that is the maximum you are willing to lose.

The reason I don't set it with my broker is I want to see the stock closing below my stop loss. if it touches it during the day and bounces back up I will keep the position. If it closes below, I will close it the next day. There is no right and wrong, just what suits you. You'll find your preferred method as you gain experience. Till then do what you are doing currently with setting a stop loss, it's the best way to learn.
 
Hi Frankplus, the limit price you put in is the price you will offer your shares for sale when shares trade at the $24.68. If after the very first trade at that price happens then you have an order in the market to sell at $24.68, if other orders also come in at same time as yours but lower they will be filled first .This is how price can jump below your stop if your limit is equal to your sale price. If you place a limit price lower the risk of not selling is reduced but you have to be happy with lower sale price for your shares.
There are no guarantees, price could open tomorrow well below your stop but unlikely.
Or put it this way the limit price you choose is how far you are willing to chase price down to sell your shares .
 
The problem is that ASX doesn't have true market orders. "Market" orders get put in as limit orders 3 stops below the current price, by most brokers. A true market order could solve this lack of execution, as long as you're prepared to accept the spread.
 
Conditional orders are good for highly volatile price movement.
 
willoneau said:
Conditional orders are good for highly volatile price movement.
Click to expand...
Generally they can be. If we are just talking stop losses it could go either way. What I mean is if there is a large price drop way below your stop loss level, then you'll be glad the stop loss kicked in. On the other hand if the price just breached your stop loss and took you out of the position and then stock turned back up and went on to much higher prices then ouch !
 
OT for apt ...... i no longer use anything automated for lowish liquidity stocks (too many bad experiences that smell).

for frankie, some brokers will guarantee a sell price for a stop, some brokers charge extra brokerage for conditional orders, some brokers do not even offer any sort of conditional trades. Horses for courses. (some peeps use multiple brokers depending upon what they are doing/trading at the time)
 
HelloU said:
some brokers will guarantee a sell price for a stop,
Click to expand...
How does a broker guarantee a stop in the real stock market? In CFDs where prices are made up, sure. But on the real market, I don't see any mechanism to guarantee the price of the sale of a share.
 
Zaxon said:
How does a broker guarantee a stop in the real stock market? In CFDs where prices are made up, sure. But on the real market, I don't see any mechanism to guarantee the price of the sale of a share.
Click to expand...
yeah, oooops, scrap that rubbish info (my head was elsewhere)... was thinking of (and no idea why i said guarantee) the triggered order being executed prior to any cancellation thru the limit value (so 3 pip spread). In my head was also thinking about (memories) of the old iress when the 'all or nothing' order type was available to regular punters .... soz and thanks.
 
HelloU said:
OT for apt ...... i no longer use anything automated for lowish liquidity stocks (too many bad experiences that smell).
Click to expand...
This is a valid point to consider that HelloU has pointed out. It might be a new concept to you Frankie but the experienced traders know about this in low liquidity stocks. It's called "Stop Hunting". If you trade thinly traded low-liquidity stocks you are bound to experience price swings (especially intra-day) that causes the stock to drop sharply before reversing and going higher. This type of thing is done by rogue players and some institutions in the market to trigger your (and other poor souls who are retail traders like us) stop to grab our shares before the stock continuing higher.

APT has a lot of liquidity so not easy for the rogue players to manipulate.
 
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