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Posts: 1,998
Do any series investors set a stop loss or use price locking, what sort of percentage do you set,was thinking of setting up for my stocks with a decent profit in case of a market correction in the future
Posts: 951
jcb, I generally don't use stop losses and I might not be a serious investor. People like to have strategies when tey are serious, this is good but I think you need also trust some instinct just temper it a bit with seriousness.
My reasons for not using stop losses is they can kick in on a temporary drop and they will not always be quick enough on a catastrophy.
I have used them and probably will again, but I have the rime as I no longer work to keep an eye on price movements, but even that way you can over do it.
Market correction maybe?
If in doubt about anything I tend to half it, or sometimes double it. so my advise here is set a stop for perhaps half of your shares!
If there is a crash you can buy back in and so later offset those losses from unsold stuff.
Posts: 15,009
Stop losses are a con, the MM and others can see them, one of the reasons so many CFD traders close their positions on a Friday is because the market can Gap down over the weekend and although you have set you stop loss at say 5% the market could open up much lower and you are still committed to paying that extra loss!
If you have margin on your portfolio they will take that, if you lose all of your portfolio (which some traders have done) then you will still be required to pay the debt, so you have to raise money against your home or other property, whatever you are in big trouble, just as though you had bet against the roulette wheel and lost big time!
As an example Logic Investment rang me several times in a morning advising me to go short on Travis Perkins, I was against the idea as I said it was a quality company, Darren the broker kept calling me stating they knew what they were doing, in the end I relented and let them open a short position at around mid day, we went to Salisbury's and at around 1400 hrs whilst in the supermarket I received a call from Darren saying that the market had moved against my position, so taking his advice cost me £921 in less than two hours!
This is just one example the mess you can get into CFD trading and in my case the incessant calls from the broker to trade and the worry and stress I went through over many weekends including a Christmas break caused me to become very ill and my doctor advised me most strongly to close my CFD trading account.
Taking my doctors advice cost me around £31,000 to close all my positions and the account with Logic Investments, but it was the only way to stop the merry-go-round and regain my mental health!
So before entering into CFD trading consider very carefully the true risks involved to you and your family!
Posts: 1,227
Once you have established why you are making an investment in a company you should have a clear idea of the outcome that you are expecting to achieve. Although I am interested in ALL the equities and IT that comprise my portfolio, I tend only to pay close heed to those that present the greatest worry or potential.
My single biggest holding is currently MTU, a deliberate choice. My target is to ensure that no single componant has more than 3% weighting, EXCEPT where there are special circumstances. And in this case, MTU has been weighted to 8%, the increase made from the disposal of my housebuilder stocks and the reduction in my holding of Nvidia.
Provided that the UK continues to recover, the greatest growth should be with smaller companies. And this brings us to the point of a stop loss. A stop loss is there so that should your research be insufficient and you begin by losing money, you take your loss on the chin early and put money to work elsewhere.
What you are perhaps describing is the timing to take profits and ensure that your money continues to work effectively. So, evaluate your portfolio as a whole and review it every time information is released. Information might be political, economic or geographic.
Flooding for instance may affect insurers and farmers, but is good news for carpet makers. Cancelled elective operations through wards coping with Covid 19 has meant a huge backlog, but will be great for syringe makers, sterile swab makers and bacteria treatment companies when the back log is addressed.
Run your profits and keep your eyes peeled for different opportunities that start to unfold. Sell poor performers and strengthen better ones