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Post by Deleted on Nov 26, 2017 11:12:00 GMT
ensure a stop to protect all of my capital safely. If only that were possible! safely is a relative term, so it is. 
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justme
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Post by justme on Nov 26, 2017 14:39:18 GMT
30+ years experience, only recently learnt how to buy and then ensure a stop to protect all of my capital safely. This for me was a big step, now all I have to do is to learn how to sell to maximise my profit (sell at the top), I'm guessing another 30 years or so and I will have cracked that. The question may seem stupid - would not putting a stop mean that you selling low ?
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Post by GSV3MIaC on Nov 26, 2017 14:53:59 GMT
You sell at less than current price, but hopefully before the bottom, and hopefully at more than you bought for (but not always). And you are supposed to adjust it up or down occasionally. It's like a seat belt .. "but if you use that, doesn't it mean you crashed".
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Post by Deleted on Nov 26, 2017 16:42:10 GMT
The aim is to sell above the price you paid but hit the stop on a fall. For example if I invest 10k and it rises to 11k I'll put a stop at 10k5. Now I'm not betting 10k5 anymore, that is relatively safe, I'm only betting 500. If it goes up I move my stop up.
Now you could argue that I should sell at 11k but then you are out of the game, I'd rather move my risk from 10k to 500 and bet on that going up further.
I hope that helps. Play with the maths to see what works for you.
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Post by GSV3MIaC on Nov 26, 2017 20:14:45 GMT
With many platforms you can set an upper sell point too .. i.e. if my £11k reaches £12k, I'm outta here. Again, you need to remember to update it as required. This is generally less useful/used than a stop loss, but may help if you are going up a mountain in Tibet for a week and don't want to miss a spike.
You also have to be aware that a stop loss is not guaranteed - if the market goes into freefall (lots of bots selling up, a flash-crash) the 'exit at £10.5k' may prove impossible to achieve, and you'll either not get out, or discover the best you could get for selling at that time was rather worse - i.e. you sold, but at £9.8k (see what the exact stop loss terms are)
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justme
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Post by justme on Nov 27, 2017 11:11:21 GMT
The aim is to sell above the price you paid but hit the stop on a fall. For example if I invest 10k and it rises to 11k . Then even more stupid question comes-what if it did not go to 11 k but go straight to 9 🙄
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moogman
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Post by moogman on Nov 27, 2017 11:27:05 GMT
The aim is to sell above the price you paid but hit the stop on a fall. For example if I invest 10k and it rises to 11k . Then even more stupid question comes-what if it did not go to 11 k but go straight to 9 🙄 You would lose 10-9k = 1k, as your stop loss has limited the loss that you take. Without a stop loss, the price may continue falling and you'd lose even more money. In an ideal case, you would initially set your stop loss lower (9k) than your original entry (10k). But then when (if) a price rise happens, you can now raise your stop loss to 10k, and now worst-case you sell at 10k thus breaking even. After which point you can "manage your trade" and keep incrementing your stop loss over time, until it stops you out.
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justme
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Post by justme on Nov 27, 2017 13:01:43 GMT
so one would have 5O% chance of a loss anyway on unitial price movement given that one does not know whether what one buys would go up or down... what if it went down to 9 k, one sold at a loss of 1 k - would one never buy it again ? Buy back when it dropped to 5 k? or risen to 15?
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Post by GSV3MIaC on Nov 27, 2017 13:29:36 GMT
Hopefully there is a higher chance of it going up than going down (else why did you buy it). And you set a stop loss enough below where you are at such that minor random fluctuations don't trigger it (buy at 10,000, set a stop loss at 9,999 would be pretty dumb). Whether you buy again, ever, and at what level, is a trading decision you have to make based on data available at the time .. if there was a nice simple rule, everyone would be billionaires already.
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justme
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Post by justme on Nov 27, 2017 13:43:23 GMT
has anybody actually made it work ? I know bobo says he/she figured it out after thirty years ofbmmm trying but who knows , may be in a year they will say
it was not just a spell of luck and it run out 🤔
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moogman
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Post by moogman on Nov 27, 2017 14:20:55 GMT
Indeed, from a daytrading perspectice (forex and indices), it is (well should be, else you won't last long!) employed on every singe trade.
From a statistical perspective, the variables to consider are Risk-vs-Reward and win rates. For example a 50% win rate would need a 2:1 reward:risk to break-even in the long run; Any better than 50% or a better reward:risk would make a trading strategy profitable.
Aside from daytrading, I've employed it for one specific high-growth US tech share - Bought in ~$100, with a stop at ~$80. Fast-forward a few months, and I was able to move the stop-loss up past $100... Fast forward a few years, and continued trailing my stop-loss at the 100 daily MA (simple moving average) level, this was an extremely profitable strategy and ultimately bagged me more than 10x when the price "dropped" back to the stop-loss.
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Post by Deleted on Nov 27, 2017 14:49:48 GMT
The aim is to sell above the price you paid but hit the stop on a fall. For example if I invest 10k and it rises to 11k . Then even more stupid question comes-what if it did not go to 11 k but go straight to 9 🙄 Moogman explains it pretty well, my actual tactic is to operate a manual 5% stop until the share has made 5% then move into 7.5% auto stops but that is just a minor technicality (I prefer manual as it keeps me focused on the new share). All the time I'm keeping my "at risk" bet small compared to the total bet. The other part of your great question (not stupid at all) is when to buy that particular share to ensure that a 10% drop is not just around the corner? I keep a list of 20 or or undervalued shares that I want to buy and hold and I buy roughly 1 to 2 weeks before their next announcement, these shares tend to be in the £200m-2000m market cap so they tend to be under-watched, I conclude that these great little shares will have a great announcement and buy. Roughly two out of three times I get an uplift, while the rest it either sits or falls. How to chose those 20.....
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blender
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Post by blender on Nov 27, 2017 15:01:54 GMT
That's fine if there is a large pool of shares to choose from. Please apply the principles to virtual currency, which is like a single rocket with an erratic motor, often falling back to earth but then restarting and gaining ten times height. When do you consider that it will fail to restart and decide to parachute back down to earth with the winnings? Given that there is no new rocket to get on.
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Post by shyinvestor on Nov 27, 2017 16:41:23 GMT
has anybody actually made it work ? I know bobo says he/she figured it out after thirty years ofbmmm trying but who knows , may be in a year they will say it was not just a spell of luck and it run out 🤔 I have been investing in the stock market for some years now, in a small way. My results have been mixed. Some large wins, a few large losses, and mostly reasonable returns. However, in the last few years, the volatility of the market seems to have grown enormously. Bad news in what would seem to be unrelated sectors can have a sudden and marked impact on the share price. This may well be due to all the automated computer driven trading, but it makes it almost impossible for the small investor to react quickly enough to sell shares when the price starts to dip. Thus, to escape from the volatility a move into p2p which, so far, has been reasonably successful but even here we all get caught occasionally.
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Post by GSV3MIaC on Nov 27, 2017 19:53:49 GMT
One of the reasons P2P isn't so volatile is that it isn't so liquid (and in many cases there is no pricing variability anyway. or very limited discount/premium options) .. given bad news lots of investors would LIKE to rush for the exit, but find they can't get out. My dabbling in the stock market is mostly ITs or ETFs, which are less volatile (but obviously less upside potential .. however I'm not aiming for a 50% overnight windfall). If the whole market catches cold (which happens .. eg 2008 and Brexit) I'll generally think for a while and then decide I might just as well hold what I'd picked, unless there is some reason to think again.
Right now, IMO, almost all asset classes may be banging on the top of their ranges .. and holding cash leaves you subject to an X% wealth tax (aka inflation) & an unpredictable exchange rate risk to get to anywhere else. Baked beans in the cellar might be handy, except for the limited shelf life.
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