Stop Loss Orders And Where To Place Them

Written by John B Keown

It is difficult to stressrepparttar importance of placing and maintaining stop-loss orders protecting your investments. Withrepparttar 148014 Graham Investor method of investing, one might think there is such a margin of safety involved that stop-losses aren't needed. Nothing could be further fromrepparttar 148015 truth.

If you are buying a house,repparttar 148016 three most important pieces of advice anyone can give you are: "location, location, location!" With Investing they should be: "preservation, preservation, preservation!" Of capital, that is. This is best illustrated with percentages.

As an example, you may buy any number of stocks in a $10,000 portfolio. Without stops, if you lose 20% ofrepparttar 148017 value of your $10,000 (i.e. $2,000) you will need to make 25% onrepparttar 148018 remainder to get back to where you started. Likewise, if you lose 50% and are left with $5,000 you now need to make 100% profit to get back to where you started. How many people make 25% in a year? Not many! How many people double their money in a year? Even fewer!

You might think you won't lose 50% of your investment, but it does happen, and a lot more regularly than any of us care to admit. So, always use stops.

Once you have established a buy point, you can work out where to placerepparttar 148019 initial stop. There are several ways of doing this:

1) Placerepparttar 148020 stop one tick belowrepparttar 148021 most recent resistance level or swing low.

2) Use a fixed percentage, e.g. 8%, 10%, 12%.

3) Use volatility as a guide. Take a 14 day moving average ofrepparttar 148022 High-Low range forrepparttar 148023 stock (including gaps). Use a stop of 2.5 to 3 times this range.

5 Day Trading Tips for Success

Written by Mike Reed

If someone tells you that you can get rich quick day forrepparttar hills! There are no overnight successes, unless you are very lucky!

Day Trading isn't easy, but with experience, dedication, self- control and hard work, you *can* become a successful day trader.

1. How to Treat Gap Openings. A gap up or gap down open is an emotional move, and it often will reverse course and turn in to "trap open". Gaps that are less than 4 points onrepparttar 148013 SP Future tend to get filled inrepparttar 148014 same day, especially Tuesday through Thursday. Turns will occur within 20 to 40 minutes afterrepparttar 148015 open. A trader must be onrepparttar 148016 lookout for a reversal as soon as early momentum is lost.

A gap into a good support /resistance zone is almost always a good "fade" - with stops no more than 1 point on other side ofrepparttar 148017 support /resistance zone. (A "fade" is simply entering a position opposite ofrepparttar 148018 direction ofrepparttar 148019 gap. Ifrepparttar 148020 market gapped down, a "fade" would be entering a long position (buying) in torepparttar 148021 selloff.)

2. Whenrepparttar 148022 Market Moves Against You, When Do You Exit a Trade?

The way I trade, I exit as quickly as possible. There's no sense in waiting around for your "stop-loss" to get triggered whenrepparttar 148023 perceived edge is gone. I like to stay in control of my trades, and ifrepparttar 148024 market doesn’t do as anticipated, I don't wait for my stop to get hit. When there is no longer a high probability situation, exit and take a second look.

3. When Are The Best Times ofrepparttar 148025 Day to be Trading?

For me,repparttar 148026 best times ofrepparttar 148027 day for trading arerepparttar 148028 first hour andrepparttar 148029 last 2 hours. Here's an old rule of thumb (and this used to work like clockwork inrepparttar 148030 "old days", and although it has diminished a bit, it still happens):

"The Minor Time of Day"- frepparttar 148031 Market opens higher, then there tends to be a pullback withinrepparttar 148032 first 20 to 40 minutes. Ifrepparttar 148033 pullback is weak, there will probably be a continuation of rally intorepparttar 148034 early afternoon. But, ifrepparttar 148035 pullback is sharp, then you've likely seenrepparttar 148036 high forrepparttar 148037 day and you'll want to be sellingrepparttar 148038 bounces.

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