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Profe$$or

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Profe$$or

Re: None

Tuesday, 12/11/2007 8:14:47 PM

Tuesday, December 11, 2007 8:14:47 PM

Post# of 137481
Stops are not complicated. When I use the word "stop" I'm referring to a stop loss order. This is an order that directs your broker to sell a stock you hold long if it drops to a specified price. Once the stop is triggered, it is executed as a market order.

Here's an example:

Let's say you buy Tina Marie Lingerie at $50 a share. You have reason to think that Tina Marie Lingerie will make all your financial dreams come true, but you also realize it is a risky trade. You know that if the stock drops below 48.50 it means that there's trouble with the trade and you'll then want out. How can you be sure to get out of Tina Marie Lingerie if the stock drops below 48.50?

After buying the stock, you place another order; a stop sell order at 48.40. This tells the broker that any execution in the market for 48.40 or less is an automatic trigger to sell your shares immediately in the form of a market order - they'll be sold at the current bid - whatever that is.

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