Trailing Stop loss, and how I got screwed.

[Billiam23]

I'm still trying to figure out what went wrong, I'm hoping to get some incite.

I own a stock I put a trailing stop in for 21%

today the stock automatically sold. yet there was no 21% drop

When I tried to correct it by re-buying the price was significantly higher, which caused me to lose 62 shares, nowhere does it state a trailing stop will be based on the price of the stock ON THE DAY i set the trailing stop.

The trailing stop was setup on the 28th, the closing price on the 27 of the stock was at 8.25 the 28th opened at 8.54 and closed at 7.85 29th opened at 7.26 and closed at 6.57 and 30th opened at 6.22 and hit a low of 6.10

My stock ended up selling at 6.16$ yet seconds later jumped to 7.25, but I was already cased out.

This is taken directly from my bank trading site,

How does a Trailing Stop work?
With a Trailing Stop your initial Stop Price is calculated based on the previous day's close and the percentage you've selected to trigger your order. You initial Stop Limit is based on the Limit Variance you specify. For example, let's assume yesterday's close was $20.00 per share. When you first set up your Trailing Stop Order, you chose a Stop Price based on a percentage of 15% and a Limit Variance of $1.00. In this case, the initial Stop Price would be $17.00 and the initial Stop Limit of $16.00 per share.

Let's assume that the next day stock XYZ's price increases and closes at $21.00 per share. Your updated Stop Price will be calculated at 15% of the $21.00 per share high, or $17.85 per share and your updated Stop Limit would be $16.85 ($17.85 subtract $1.00). In this way, your Trailing Stop Order follows, or trails the stock price as it rises, and recalculates your trigger Stop Price and Stop Limit upward to lock in potentially greater gains.

Do I have grounds to dispute this? I even called my bank before I set this up to make sure I was doing this properly, the person claimed the 215 is based on the last days close. Today I called and the person who is looking into this claimed the price was based on Nov 27th, the following close from when I set it up (Nov 28th) it sold today on Nov 30th, yet with wasn't 21% down from the Nov 29th close.
It doesn't make sense to me

 

[iq200]

I'm still trying to figure out what went wrong, I'm hoping to get some incite.

I own a stock I put a trailing stop in for 21%

today the stock automatically sold. yet there was no 21% drop

When I tried to correct it by re-buying the price was significantly higher, which caused me to lose 62 shares, nowhere does it state a trailing stop will be based on the price of the stock ON THE DAY i set the trailing stop.

The trailing stop was setup on the 28th, the closing price on the 27 of the stock was at 8.25 the 28th opened at 8.54 and closed at 7.85 29th opened at 7.26 and closed at 6.57 and 30th opened at 6.22 and hit a low of 6.10

My stock ended up selling at 6.16$ yet seconds later jumped to 7.25, but I was already cased out.

This is taken directly from my bank trading site,

How does a Trailing Stop work?
With a Trailing Stop your initial Stop Price is calculated based on the previous day's close and the percentage you've selected to trigger your order. You initial Stop Limit is based on the Limit Variance you specify. For example, let's assume yesterday's close was $20.00 per share. When you first set up your Trailing Stop Order, you chose a Stop Price based on a percentage of 15% and a Limit Variance of $1.00. In this case, the initial Stop Price would be $17.00 and the initial Stop Limit of $16.00 per share.

Let's assume that the next day stock XYZ's price increases and closes at $21.00 per share. Your updated Stop Price will be calculated at 15% of the $21.00 per share high, or $17.85 per share and your updated Stop Limit would be $16.85 ($17.85 subtract $1.00). In this way, your Trailing Stop Order follows, or trails the stock price as it rises, and recalculates your trigger Stop Price and Stop Limit upward to lock in potentially greater gains.

Do I have grounds to dispute this? I even called my bank before I set this up to make sure I was doing this properly, the person claimed the 215 is based on the last days close. Today I called and the person who is looking into this claimed the price was based on Nov 27th, the following close from when I set it up (Nov 28th) it sold today on Nov 30th, yet with wasn't 21% down from the Nov 29th close.
It doesn't make sense to me

I'd ask the broker on how THEY define and calculate the trailing stop. Then you have the market prices and so do the calculations based on how the broker defines it. If you think there is a discrepancy, dispute it.

Bear in mind that the trailing stop loss might not be guaranteed to hit and may depend on if there are buy orders there in order for you to sell. In other words the price may have just jumped over your stop price and NOT gone through it.

 

[mpups]

The trailing stop was setup on the 28th... the 28th opened at 8.54 and closed at 7.85

Im guessing your initial stop gets set 21% below the 7.85 close = about 6.20

29th opened at 7.26 and closed at 6.57

Stop still at 6.20 (it doesn't trail down with the price, that's not the point of it)

30th opened at 6.22 and hit a low of 6.10

Stop still at 6.20 (as above) so gets hit and you suffer some slippage?

Do I have grounds to dispute this?

Doesn't look like it i'm afraid, but you may want to confirm for yourself by asking them as well.

BTW trailing was not the problem, because it didn't trail, the stock just tanked! better luck next time

 

[Billiam23]

Im guessing your initial stop gets set 21% below the 7.85 close = about 6.20



Stop still at 6.20 (it doesn't trail back down with the price, that's not the point of it



Stop still at 6.20 (as above) so gets hit and you suffer some slippage?



Doesn't look like it i'm afraid, but you may want to confirm for yourself by asking them as well.

BTW trailing was not the problem, because it didn't trail, the stock just tanked! better luck next time

Thanks you so much for the explanation, I wasn't aware of in not "trailing down" and it's not because I didn't try to learn about trailing stops, I even waited on hold 45 min for my bank to explain it to me.

I am still going to dispute the trade due to me not receiving this information by their (expert) when I inquired, If It was explained to me as your explanation, then I would only be mad at myself. The bank is going to listen to the call I made and judge accordingly. I think i still have a case since I specifically asked about it dropping yet the (trading expert) wasn't sure himself, Go figure. It's under 1000$ but it was a loss from my pocket due to misinformation.

 

[Billiam23]

Thanks for the explanation, it is appreciated.

 

[tallytrading]

You should also understand which platform you used and if the title was liquid

 

[Vince-M-WT]

I'm still trying to figure out what went wrong

I dont recommend trailing stops for anything but taking a pee, letting dogs out, or answering door

Ive never set stops by % and didnt even no it was possible. I always know the risk I am willing to take before getting in a trade so if you wanna risk $150 on a 6.00 stock and you think with the price action your seeing you need a .35c trailing stop you should be taking 428 shares with the potential to make 70c on the trade or $300 2to1 profit to loss potential and 3to1 anytime I hold overnight.

Just what I recommend and works for me Good Luck Man and always know the dollar amount you wanna risk and the reward your aiming for before you get in. Not just a % drop