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Old 02-12-2011, 12:25 PM   #41
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Originally Posted by ERD50 View Post
So if it opens down 70%, and your stop loss was at 5%, you'll get sold out at the open.
Also, a stock that drops 70% in one day is going to have large gaps in the bid price on the way down. You're looking to sell at 5% down, but the next bid is 40% lower and you get executed there whether you like it or not.

Or . . .


Or . . .

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Old 02-12-2011, 06:13 PM   #42
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The fact that the dynamic portfolio insurers blew themselves up in 1987 is pretty good evidence that relying upon stop-losses can be a faulty strategy. And that was on a broadly diversified index. IMO, buying exchange-traded puts is a superior way to create a foolproof stop-loss.

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Old 02-13-2011, 04:01 AM   #43
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Old 02-16-2011, 09:47 AM   #44
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Originally Posted by EarlyTwenties View Post

Here's a failure which I learned from that taught me to use stop losses:

... Had I used a stop loss. I would have only lost 5%, and would have had a huge buying opportunity.
Geez, I forgot the obvious and recent example of stop-loss pain: Can you say "Flash Crash"?


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