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I had the same thing happen Jim.....the lesson has stuck with me ever
since.
I had a stock (long since forgotten) that was trading around 44 when I
bought it, and languished in the 43-44 area for a couple of days. I had
heard that it was a good idea to place a 7-10% stop at the same time you
placed your order (to protect your capital,etc.) so I put in a stop loss
order at 41 1/16. (I had also heard that it wasn't good to place stop
orders at "even" numbers such as 40,41,etc.)
Well I watched in horror as the price dipped, and headed for my
stop.....I still wanted the stock, because I had seen a lot of big buys
coming in the last few days (part of selection criteria), but it dipped
down only long enough to hit my stop, then headed north for 10+ points
before even stopping long enough to look back.
My sale at 41 1/16 was not only lowest price bid on the tape that
day....it was the ONLY sale at that price !<g>
Lesson learned.
Jim Greening wrote:
>
> Tim,
> First only 1/4 under is too tight of a stop. Second to avoid exactly
> what happened to you, I never set a stop with a broker unless I'm going out
> of town and away from a telephone. Floor traders have been know to take
> out the stops and then run the price up. Instead, I set a mental stop and
> wait for the stock to close below that stop. Then I put in a market order
> to sell at the open.
>
> Jim
>
> ----------
> > From: Tim Kruzel <TKruzel@xxxxxxxxxxxxxxxx>
> > To: MetaStock User Group <metastock-list@xxxxxxxxx>
> > Subject: Did I Get Screwed or Did I Just Screw Up?
> > Date: Thursday, September 11, 1997 2:57 PM
> >
> > I would like to describe a trading situation that occurred to me today
> > and get some opinions from you "salty and seasoned" traders.
> >
> > I bought a stock TRDT (OTC) about a month ago at 15. The bid/ask
> > was bid:14, ask:15. Naturally I expected an upward breakout. The
> > breakout came yesterday. The stock ended the day with a bid/ask of
> > bid:16 1/4 ask: 17 1/8. In order to protect against a loss I placed a
> > stop loss order at 16 just prior to the market's opening. To my
> > surprise, 5 minutes after the market opened I received a
> > confirmation call from my broker. My TRDT holding was sold at
> > 16 1/8. As of moments ago TRDT has a bid/ask of bid: 17 5/8,
> > ask: 17 7/8.
> >
> > Did I make an error in judgement with respect to where I set my
> > stop loss given the wide bid/ask spread, or did I just get the shaft
> > from a market maker? Any comments, questions, observations
> > welcome. Thanks,
> >
> > Regards
> > Tim
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