Larry,
You are asking a useful and serious question. I know many people were burned in the stock market crash who were AIMing or scale trading, and the like, particularly favoring, risky, low-priced stocks. No matter how much money you might have made trading Global Crossing or WorldCom, when they went to zero, you lost all of those previous profits, as well as your starting capital.
First of all, I think you'd be safer, using ETFs, than individual stocks. You might not get the same returns due to lower volatility, but you avoid the deep diver phenomenon.
I'm not a fan of stop losses. The fact that a stock declines, is not a reason to sell it, if the reasons for your purchase are still valid. I'd prefer to use fundamentals to decide which stocks to cull, I'll give some examples.
I use ValueLine, it's a little pricey, but you can probably find it in your local library. I pay a lot of attention to their financial strength ratings. You could select a minimum rating with which you are comfortable, and sell any stock that falls below that rating. That should eliminate any chance of being stuck with an Enron or Global Crossing. S&P also publishes an earnings and dividend quality rating, as well as a credit rating. You could use them instead.
Finally, I like dividend paying stocks. These tend to be seasoned, successful companies. I like to buy stocks of companies that have a track record of regularly increasing dividends (I tend to avoid those with unusually large dividend yields, however, they are usually fleas). If you made it a point to buy these kinds of stocks, you should eliminate those stocks if they omit a dividend. They obviously don't meet the fundamentals upon which you purchased them. Indeed, you could make a case for eliminating them, for any reduction of dividend. I would certainly reassess any stock that reduced it's dividend. The company, itself, is telling you something about their current financial status.
AI
