More on Stop Orders

The Cashin' In mail bag had a viewer question about stop orders. She was stopped out on several stocks and she said that most of them then went higher. Should she give up on them was her question?

This is a dilemma with stop orders that I have written about several times. The panel said that they would keep using stop orders and that there is nothing that says once you are stopped out that you can't get back in. I think I remember that a few weeks ago Jonathan said he does not like to go back into something after he has sold it, but I might have that wrong.

The take away is still that stop orders as a strategy, like all strategies, have flaws. Any time you sell a stock, stop order or not, the next move could be up a lot. Any time you buy a stock the next move could be down a lot. A few weeks ago I wrote about a stop order I placed on a hot potato of an oil stock that was up 20% very quickly. I was stopped out, the stock spent most of the next couple of weeks a little lower and today it is about .25% above where I was stopped out although it has been higher in the interim.

I think part of selling a stock has to be that you are willing to take the price you get. If you get panicked out of a stock at a low (happens to everyone sometimes) and then it rallies, well that is too bad but once you sell it the stress of holding the name is gone, is that worth something to you? Small consolation, I know.

The best thing I can suggest is to, recurring theme here, detach emotion from the trade. Learn from your losers and your winners. For some folks the best thing is to completely leave the name alone for awhile and come back to it later. Whatever works.