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  • Why We Don't Use The 7-8% Stop Loss Rule 0 comments
    Mar 30, 2012 1:45 PM | about stocks: SWI
    The recent action in SWI and notes in the chart below are why we don't use the 7-8% rule.

    (Click to enlarge)

    We've seen it way too many times where we'd buy it right, nail it and get stopped out for no reason. Sometimes there is more to it than just a simple set an X% stop and that's that. Markets are ever changing and especially in today's climate dominated by black box trading and high frequency trading hedge funds not to mention the trade bots out there.

    The biggest point we want to make about this is before you stop out at an X% stop you had better look where support levels are and particular moving averages that act as supports too as you sure don't want to stop out at an X% stop and find out only later that if you would have looked where support is you never would have stopped out. So knowing this no longer do you ever have to get ticked off because you got stopped out only to see it reverse without you.

    As for SWI currently? At this moment in time the right thing to do was NOT set the 7-8% stop as the stock has since reversed without you had you did that. But as we've said time and time again around here that trading and investing is more of an art than it is a science and one needs to remain flexible.

    To learn more and receive our free report - "How To Outperform 90% Of Wall Street With Just $500 A Week", like us on Facebook or sign up for our free newsletter.

    Themes: oneil, ibd, canslim, stop loss Stocks: SWI
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