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Hi Zane,
I'm sorry to hear about your friend's loss. Someone please correct me if I
am wrong, but I do not think that it is legal to trade a stock outside of
the posted trading hours of the exchange upon which the stock is listed. I
presume that what happened is that the news regarding IOM's loss came out
after the exchange had closed. In a case such as that, the stock could very
well open at a price lower than what it had closed at the previous day.
The stop loss order would then most likely be executed at the best price
that could be obtained, which might be far below the stop price.
The only way to avoid a loss, in such a case, would be to put in an order to
cancel the stop loss prior to the exchange opening. This assumes that the
affected party is privy to the news of the dividend loss. Even then, the
stop loss order might be executed before the cancel order is executed,
depending upon a number of things, such as how efficient your broker is, how
many new orders were generated due to the news of the company's loss, etc.
When prices are moving very quickly, it is difficult to get the price you've
specified as a stop loss. I know this from experience, unfortunately.
Bob Willard
-----Original Message-----
From: diamond <diamond@xxxxxxxxxxxx>
To: MetaStock-list <metastock-list@xxxxxxxxxxxxx>
Date: Wednesday, February 04, 1998 9:56 AM
Subject: After Market Closes Trading
>A friend of mine bought 2000 shares of IOM at $12.25. He put in a stop
>loss. Because of a 2 cent dividend loss, the stock dropped to about $8.00
>in one day and he lost about $8000. The thing I don't understand, is that
>it was traded after hours. My friends stop-loss was useless.
>
>Can someone verity this? Can stocks be traded after wall street has closed
>for the day? Is the stop-loss only good during market open hours?
>
>I can't seem to find anyone in my area who knows about after hours
>trading.* I thought all trading stopped after the market closed. It does
>seem a bit shady if it is true. It gives someone somewhere a big advantage.
>
>Regards
>Zane Koir
>Abilene, Texas
>*
>
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