Danger Of Using "Stop Loss"

Poll: Do you use stop loss?Auto or manual stop loss?
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Never use any form of stop loss
60.00%
3 60.00%
Manual stop loss
20.00%
1 20.00%
Auto stop loss
20.00%
1 20.00%
Total 5 vote(s) 100%
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(09-01-2015, 04:39 AM)specuvestor Wrote: I think there's some confusion between "stop loss" and "cut loss". The former is a trading discipline, the latter is to respect the market that maybe one is wrong. Both are matter of art and highly dependent on one's experience and discipline. Both are also highly dependent on your asset allocation skill. One's psyche and strategy is different when it is 1% vs 10% of portfolio

"Cut loss" is usually fundamental driven or sometimes respecting the unknown. Is it wise to average down in 1997 or accumulate in late 1998? Or to buy fundamentally strong stock like Satyam or Parmalet when they crashed?

As always we have to consider the downside risk and allocate accordingly to our risk appetite and conviction. If sure win then just sell everything and "hoot" Smile
i think you are right. It's very easy to use these 2 terms interchangeably. IIRC only "stop loss" is available on DIY online brokerage. Cut loss?
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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Hi temperament... cut loss is a discipline... Not an execution function Smile
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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(09-01-2015, 08:02 AM)specuvestor Wrote: Hi temperament... cut loss is a discipline... Not an execution function Smile
HuhBig Grin
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
(09-01-2015, 08:15 AM)Temperament Wrote:
(09-01-2015, 08:02 AM)specuvestor Wrote: Hi temperament... cut loss is a discipline... Not an execution function Smile
HuhBig Grin

Big Grin The "cut loss" is the "sell" in DIY online brokerage, albeit it is done after a fundamental analysis process.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(09-01-2015, 09:41 AM)CityFarmer Wrote:
(09-01-2015, 08:15 AM)Temperament Wrote:
(09-01-2015, 08:02 AM)specuvestor Wrote: Hi temperament... cut loss is a discipline... Not an execution function Smile
HuhBig Grin

Big Grin The "cut loss" is the "sell" in DIY online brokerage, albeit it is done after a fundamental analysis process.
Big Grin True. I had done it with some S-CHIPS; Cut on the spot if not would have lost even more.
But some people (too creative or greedy type like me) also use "mental stop loss" in DIY online brokerage as "trailing stop loss" in a bull market like trying to squeeze lemon juices. Of course if market turns suddenly, then go back to Que lol.Smile
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply


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