Owned by stop-loss order

Discussion in 'Trading' started by Ghost of Cutten, Jun 13, 2010.

  1. LEAPup


    The stop loss debate should rage on in this thread. I limit the stop, but as noted in the article posted, if the equity becomes a falling knife, the order probably won't execute. If price stays down, and doesn't whipsaw back up...ouch!

    Double edged sword, but I use stops.
  2. 1) It's slightly "amusing" that he is a management consultant, a University of Chicago MBA and believes that the market cannot be timed. :D
    2) Atleast "it" happened to him and not someone else who would have trouble earning the money back. :(
  3. I am just thinking, isn't the reason why stocks or any other instruments move is because of stop loss? We either get hit or we hit someone else with our order.

    We just have to becareful where we set out stop loss order, which means taking into accounts of liquidity.

  4. what a moron! As a chicago grad his illogical and stupid statement makes the school look bad.

    "You can't time the markets," says Mr. Pinder, who has an M.B.A. from the University of Chicago. He adds that he wanted "to take the emotion out of selling."

    He explains: "When I first started working, I hoped to have the option to retire by age 50. The bursting of the dot-com bubble probably put us back to 55. The 2008-2009 crash put us back to age 60 or so. And now we'll maybe have to work an extra year, or just live with less money whenever we do retire."

    "Within minutes," says Mr. Pinder, he "had lost all my gains from remaining steadfast in the market throughout the previous 18 months." His net worth, Mr. Pinder estimates, declined by 10% solely as a result of the failed stop-loss.

    My Opinion:
    This guy (Mr Pinder) has a MBA, was asleep at the wheel during the dotcom bubble, sat on his ass during the 08-09 slide and still doesn't understand how a stop-loss order works!!!!!

    I hope he does well in his "day job".

  6. The beauty of the stop: once triggered it becomes a market order.

    I never use stop-loss orders.
  7. According to the article, he moved his money in to VTI in March 2009 (not bad timing for somebody who doesn't believe you can time the market)...which puts him in VTI somewhere between $38 to $42. VTI hit a high of around $62 just over a year later (Hmmm, I'm a fairly conservative investor and I'm sitting on a gain of about 5 times the historical averages...nope, I'm a piggy, piggy).

    However, the scary thing is the statement from the brokerage guy:

    Matt Billings, director of trading services for online brokerage Scottrade, suggests that investors add a "limit" to their stop-loss order, thus ensuring that a stock won't be automatically sold at an artificially low price. Mr. Billings says that fewer than 10% of Scottrade's customers use stop-loss orders, but more than half use limit orders, specifying the exact price at which they want to buy or sell shares.

    People don't know how the stop-loss works...Let's throw another piece in the puzzle for them to ponder...
  8. maxpi


    Deep out of the money options as insurance are expensive but possibly worth it. I'm not sure that position traders can afford them though. "Smarter" scripted stops could do a better job of getting him out of the position too. He's in the 1980's technology...

    Or he could daytrade the index futures, I wasn't in the market that day but I looked at the charts, I'd have been short when the crazy ride started...
    #10     Jun 13, 2010