Stop losses

[jasonfi]

Hi, I recently bought into a position in BSTC - setting an appropriate stop loss. Unfortunately during the day the price dipped far lower than my stop loss - and this meant my position was sold at a price worse than my stop loss.

How do experienced traders avoid this?

Thanks
Jason

 

[mike.]

Are you with a spreadbetting broker Jason ? unfortunately, there is nothing you can do, its called " slippage " have a look at a couple of other broker charts on your stock and see if they show the price dip, if not, you may have become a victim of a bit of designer slippage. Spreadbet companies mirror the market price in a fashion, the prices they quote are their own prices and not necessarily the market price, therefore subject to manipulation. The only way around it is dont place a stop, then it cant be hit.

 

[malaguti]

Are you with a spreadbetting broker Jason ? unfortunately, there is nothing you can do, its called " slippage " have a look at a couple of other broker charts on your stock and see if they show the price dip, if not, you may have become a victim of a bit of designer slippage. Spreadbet companies mirror the market price in a fashion, the prices they quote are their own prices and not necessarily the market price, therefore subject to manipulation. The only way around it is dont place a stop, then it cant be hit.

don't forget a guaranteed stop, depending on the broker.
but yes all these platforms are automated, in my opinion there should be no reason unless it gaps or liquidity is very low that a stop cant be filled on or as near as dammit. In which case as you say Mike, its the broker

 

[mike.]

Sorry, yes, as malaguti rightly says, You can place a guaranteed stop with certain brokers which there is a small charge for when opening the trade.

 

[jasonfi]

Thanks. This is with a standard shares broker, I'll ask if they have guaranteed stops. If not, I'll consider this a factor if/when I next shop around for a broker.

 

[darktone]

Hi, I recently bought into a position in BSTC - setting an appropriate stop loss. Unfortunately during the day the price dipped far lower than my stop loss - and this meant my position was sold at a price worse than my stop loss.

How do experienced traders avoid this?

Thanks
Jason

Sounds like your stop was gapped. Its a natural part of the market.
For example, you had your stop at 100, the last price was 110 then printed 80. Your stop will fill at 80.
This one of the problems of using a hard stop.
Check the tick data if you have it to see what happened around the time your stop was hit. If youre using a sb or broker ring up and have a moan, they might well 'adjust' your loss.

Cheers
D

 

[mike.]

Without clogging up the OP thread, im interested how this limit order works as a stop darktone, something im failing to grasp, not in a argumentative way but as a newbie trader myself. Ill have another read through your explanation.

 

[darktone]

Without clogging up the OP thread, im interested how this limit order works as a stop darktone, something im failing to grasp, not in a argumentative way but as a newbie trader myself. Ill have another read through your explanation.

Mike, feel free to ask any questions in the thread. No such thing as a silly question imo.

Cheers
D

 

[newton trader]

It sounds like your stop got hit with some slippage. That's trading. Best way of dealing with it is to anticipate it.