Hello you wonderful and kind people that make up this forum. Hope you are doing well and enjoying your weekend.
I wanted to kindly ask regarding how tight stop losses are at triggering please. For instance as an example if i invested in Walt Disney (NYSE: DIS). The current price is around 102.50 USD. If i set the stop loss at 10% lower than the current share price 92.25 USD i wanted to know how this would kindly work please. For instance say if there was a sudden drop over an hour on some bad news from 102.50 USD to 82.50 USD how can i determine how close i would get to my stop loss of 92.25 USD please? Would this be quite tight so no matter how sudden the drop, this should trigger around the 92.25 USD mark please? If anyone could kindly help me with this it would mean the world to me and i would be forever grateful for your support.
Hope you continue to do extremely well with your trading and investing. Thank you to everyone who is an amazing asset to these wonderful forums. All the very best to you.
I am not a big fan of stop losses so probably not the best person to answer.
If you set a very tight order then there is a risk that some normal volatility can trigger it but if you set a large gap then there are all sorts of issues. Obviously if a price gaps down then it will go straight past the stop losses and trigger them at whatever price it gaps to (or potentially even lower if it isn’t immediately executed). Thus there are no guarantees whatever price you set a stop loss at.
Rather than set a stop loss you could set tight alerts and respond with a decision whether to sell but this is somewhat dependant on you being available to react to the alert.
There are numerous problems with stop losses. First I’ve seen instances where the market briefly spikes the price (up or down) and then normal activity resumes (potentially with an order filled by trigging stop losses at nice prices). In your example, if a major company (such as DIS) instantly dropped 10% you have to ask yourself whether you think this would be temporary and the price would bounce back on the fundamentals of the business. Also what is the probability/risk of it dropping significantly more than 10% (without gapping down). If you are protecting against it gapping down 20% then a stop loss at -10% isn’t going to limit the loss to 10% anyway. If you are covering a risk of it dropping to 11% then is it really worth risking a stop loss at 10% when you might decide to stay invested and assess the news or monitor any bounce or subsequent trading.
normal stop losses seem to work fine i find. however if using the cfd platform stay well away from stop losses if the stock is available after hours/pre hours
I had a stop loss set over 10% and in pre hours it just threw me out because of the terrible spread
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I say the same, Cdf are casino type operation on here. it says it uses tradingview chart but then i get triggered according to chart here but same chart on trading view prices doesnt even get close to your stop lose price point, so must be their fees and spreads.
Correct, it does use Trading View but Trading view doesn’t use 212 spreads so the charts will look slightly different on the corresponding websites.
The CFD spreads can be wild at open so I always remove my S/L before.
I put stop losses everywhere but won’t use them again.
A spike up or down causes another the other way, and they can be “zero” width. Then the price goes back to what it was.
So it goes 100,100,100,75,125,100,100,100
and you just lost maybe 25% for no reason.
Using alerts is better I think. You get the shock without the actual loss!