I've traded enough to know that stops are a double-edged sward . . . and the back edge usually does the cutting. :~) IMHO, if one were in the habbit of placing stops close enough to the market to prevent a loss today, they would have probably been stopped out and/or whiplashed several times during this bull run. Don't you think?

Most of what you advised was done yesterday, and last night I learned the difference between 'Stop Limit' and 'Stop loss,' thanks Bill. However, I've been doing nothing but buying today and this DIP is about to kill me.
;)

I'm going to agree with ToddL. I think stops are destructive and potentially damaging to your trading. Before you jump on me, let me explain.

With high volatility, major greed buildup and people awash with funds larger swings are bound to occur. But the market emotion will stop you out constantly only to have it reach a new high in the next few trading sessions.

I think you have to remove your stops but do what this blog has been doing since day one: Read the fine print - read between the lines - ignore the financial guru media

Then if your stock breaches your psychological stop you wouldn't worry as your assumption of a rebound was sure to take place. On the flip side, you could adjust your stop lower (which in theory was there for a reason, thus adjustment lower is just removing the stops function)

Prime examples - ICE, RIMM, RWC, YHOO, GOOG

My take - you have to do what makes you emotionally comfy

/d

I'll throw in my two cents. I prefer mental stops if I am able to stay close to the market. If my stop is hit, I have a chance to try to trade a limit order, rather than a market order and sometimes avoid getting my pocket picked on a bad bid / ask spread. I also think Position Sizing is the ultimate risk control method, rather than stop losses. I am in many of the sectors that are getting beat today, but only in moderate position size, so my overall portfolio is not experiencing irreparable damage.

+ $.02

My 'stops' are always mental and moving (mostly based on trend lines, not %). Usually first sale is a partial sale.

In a break down day (like this) I am looking at daily charts of stocks taking on water in the opening few hours and making a list of those having broken short term trends. Then I calculate my orders for selling down to my 'comfort level' and then... wait.

If the stocks break those opening range lows the order goes in market. If they hold the lows I will wait to see how they close- if they close above open range they live; below they die. Those closing in range are subjective... depends on how close to sleep level I am invested and how the account balance goes into close.

Stockman:

thanks for your +$0.02 ... having a consistent approach certainly makes the most sense. Just curious though for those that die after close are you selling in the after hours market or writing market order for the next market open?

all

I do think Bill was targeting those requiring an auto pilot approach when referencing stops and I am sure we all need those occasionally at least.

GW

gwuk-

Perhaps I worded that poorly. Many on the sick bed seem to hold the range through the day then in the last hour they decide to live or die. I am watching those positions throughout the day and will execute a market order if / when that opening range is broken. By making my list, deciding how much to cut loose and allocating the trade in the morning, I can execute the trade in a few seconds and would rarely have to worry about it after the close.

Following the trend lines can also be useful.Shorter term 5-10 day,or longer 3month or even yearly ,can help assess how much damage you can take. PM stocks are very volatile(traders' paradise) and a lot of people get emotional and sell into bottoms.