| Any trader on line needs to set stops. But there are | | | | are volatile at opening. Most mornings, for instance, |
| no hard and fast rules to follow. You,need to develop | | | | NASDAQ stocks either gap up or gap down from |
| a system that fits your trading style. This means you | | | | their prices at the previous day`s close, and then |
| need to follow your trading plan. However, there are | | | | they swing wildly as overnight market orders are |
| a few tips I can share with you about stops that | | | | filled. For example, a stock could close at 33, open |
| you might already know. Keep these in mind as you | | | | the next day at 32.80, drop to 31.94, and then |
| practice and cultivate the skill of setting stops.First, | | | | bounce back up to 33.15 before stabilizing and finding |
| find out if your broker has rules about where and | | | | its direction. It could also close at 33 after a good |
| how stops are set. For example, some brokers have | | | | day, open the next day at 33.75, spike up to 34.50, |
| a rule that protective stops must be set at a | | | | and then drop back to 33.60. The possibilities are |
| minimum amount below the current bid when you`re | | | | endless.If you, the trader on line, have an overnight |
| long, a stop sell, or above the current ask when | | | | stop in place on a long position, it`s likely to be |
| you`re short, a stop buy to cover. The rule may be | | | | triggered by the morning`s volatility. This normally will |
| that a stop sell order must be at least .25 below the | | | | stop you out at the low end just before the stock |
| current bid.This trade isn`t usually a problem with a | | | | bounces back up. Remove your stops after the |
| high priced position. But, with a very cheap position, | | | | market closes, and reset them after the opening |
| you, the trader on line, might not be able to set a | | | | changes the next morning so they will protect you, |
| tight stop unless you wait for the bid to move up. In | | | | the trader on line, from a real downside rather than |
| addition, if the price of a position is dropping quickly, | | | | routine volatility.You might consider doing what one |
| the bid may come too close to the stop you`re | | | | trader on line does, particularly when the market has |
| trying to place before you`re able to place it. This can | | | | no consistent direction. Avoid holding many positions |
| cause your order to be rejected. Another rule some | | | | overnight. Once you, the trader on line, gets better |
| brokers have is that stops can`t be set more than a | | | | at expecting what will probably happen the next day, |
| certain percentage lower than the current bid or, on | | | | realizing there can always be overnight surprises, |
| a short, higher than the current ask. They may | | | | you`ll feel more comfortable making judgment calls. |
| specify that a stop be set no more than 30 percent | | | | As always, if you, the trader on line, don`t have a |
| lower or higher. I have no idea why you, the trader | | | | good idea what will happen, it`s best to avoid the |
| online, would ever want to lose 30 percent of the | | | | situation, and stay out of the position. In addition, if |
| value of your trade before stopping out, and I would | | | | you`ll be unable to trade for several days, consider |
| never recommend setting a stop that low.My second | | | | whether it makes more sense to set stops or to exit |
| tip is to always review orders carefully before placing | | | | your positions altogether. Unless you`re in a great |
| them. You`d think it would be impossible to place a | | | | long term trend trade and the market has a definite |
| limit order when you, the trader on line, mean to | | | | direction, it may be better to exit all positions and |
| place a stop, but it`s easy to do when you`re in a | | | | start fresh when you return to trading. Your capital |
| hurry. You need to make sure you, the trader on line, | | | | and profits will be safe, and new trading opportunities |
| don`t enter a limit order out of habit when you mean | | | | will be waiting for |
| to place a stop loss. If you place a limit sell order at a | | | | you.-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=- David |
| price below the current bid, at the place where you | | | | Jenyns is recognized as the leading expert when it |
| meant to place your stop, it will execute right away | | | | comes to designing profitable stock trading |
| and you`ll be out of the trade. Since a successful | | | | systems.Discover the "secret formula" of trading that |
| trader on line generally uses limit orders to enter a | | | | anyone can useto consistently generate BIG profits |
| position; it`s not surprising that many traders have | | | | from the market by downloading your FREE copy of |
| been known to place two limit orders in a row.Last, | | | | David's new UltimateStock Trading Systems course. |
| don`t leave stops in place overnight. Many markets | | | | |