Anavex Life Sciences Corp (AVXL)

[Drano]

RED ALERT: a word about stop losses.

When you put in a stop loss ("sell if the price reaches .49") it shows up on the market makers' order books. They see those shares sitting there, and if there is great news or some other reason that someone wants them at a lowball price, they will "walk" the price down there, grab your stock, and then it will reverse upward. Think I'm paranoid and imagining this? Nope, I and several colleagues have seen this happen in real time, and there are numerous articles that confirm this.

What is much better to do is to put a running stop on it -- tell them "Sell my stock if it goes down (for instance) 6 cents." (or you can tell them, if it goes down X percent). THAT kind of order does NOT show up on the order books, so they don't know it's there. The risk with this kind of stop is that the stock could run up 20 or 30 cents, and then go down the 6 cents -- boom, you're stopped out -- and then it goes up. But to me that's preferable to being a sitting duck.

I think you need to have VERY loose stops for a volatile penny stock like this.