Stops

[Bassmaster96]

Do you set stops on some of your positions? I've got one that is getting close to my target, but I think it will probably go higher. I've already upped my target once. I was thinking about setting a stop at my original target just to protect it, so that if it falls, it will automatically sell right around my original target. If it keeps climbing higher, then I'll adjust the stop. Anyone have any thoughts on this? Also, do stops only work during market hours?

[boneil]

when using stops you need to be aware of how they work. A stop simply means that when a certain price is hit, the stop is triggered and a sell order is then created. Depending on liquidity, you may get alot of slippage on the price you get filled. There's very little liquidity during the pre and after market trading sessions so your stop may get triggered and your order may get filled at a ridiculous price. Also, gap downs will trigger your stop and theres no telling where you will get filled. I have seen novice traders get wiped out on gaps and not understand why they didn't get a fill at their stop price. When the sell order is triggered, there has to be a willing buyer. And using stop limit orders can be even worse. A stock can gap down below your stop and never fill because price never traded at your limit.

I wouldn't have stops open for off hours. I would consult your trading platform to figure out if your stops are active during the pre or after market session. I do use stops during trading hours.

[haftafish22]

I don’t use stops, but to address one of your comments. If you are moving your target up every time the stock looks good, you can get burned. If you feel like it will keep going, sell some of your shares at your target. Don’t get greedy and try to sell everything at the top. A good trade for me is selling as they go up and not trying to call the top. Just some thoughts

[Bassmaster96]

Thanks for the thoughts guys. I was afraid of that on after hours with stops. I wasn't too concerned if it only applied during market hours, but I'll definitely have to check if it is open after hours and pre market as well. That's a good point on targets as well. I haven't thought about selling on the way up, but that's a good idea too. Thanks again guys