Stop loss Question

[arxpress]

Let's say that I have a position in a stock at $25 per share. I've made a few bucks on it and don't want to give it all back if the price drops after hours. So, I set up a GTC (good till canceled) stop loss (called a stop market on TD Ameritrade). If I set the stop loss at $20 per share, and it goes below that after hours, does it sell for $20? I called and talked to my TD Ameritrade representative about it and he said if it falls past $20 and opens the next morning at $10 or $12 etc., then that is what I sold for. So, I could put a stop loss at $20 after hours and actually sell for $10? Or even $1? That doesn't seem right to me.

[apenland01]

All the actions happen during active trading hours, not after hours. Your guy is correct. That really would only happen on a highly volatile stock, but it could happen. If you are worried about the stock price, sell it and take your profits. You can always buy it back later if it drops to $10 or $1....

[boneil]

If your stop loss is triggered, why would you get $20 per share, if there are no buyers at $20? A stop loss is a market order. You will get a fill at whatever the stock is trading at.

You could set a stop limit order. So if the stock trades below your $20 price, the stop becomes a sell limit order of $20. But, there has to be a willing buyer at $20 to get a fill. If the stock gaps down to 19.99 and goes lower, you will never get a fill. Your limit order will sit there until a buyer bids up the stock to $20 or you change the order to a lower bid.

[Bassmaster96]

I don't think you can set a stop market after hours, I think it has to be a stop limit as mentioned above.