Help! I'm finding it difficult placing stops on low priced
($1.00-$2.00) stocks that have done well for me (gains of
30-40%). Most have large spreads between the bid &
ask. Want some protection but don't want to give
up 1/3rd of the gain doing so if the market maker is
willing to take me out. For example, I bought a volatile
Nasdaq stock with a rounding base at $1.06 about a month ago.
It ran to $1.60 over a few weeks time, then stalled (went
sideways) on lower volume while digesting that monster gain.
The bid/ask frequently shows a $0.18-$0.20 spread (especially
overnight). So at $1.60 last price and not
moving higher, it might show $1.46 bid, $1.64 ask.
I'm willing to accept being stopped out at around
$1.54 in exchange for the upside potential (another burst of
$0.20 or so), but fear if If I put in a stop loss at that price,
I'll be immediately be taken out by the market maker before the
stock reverses higher to meet the ask.
Looking for suggestions on better ways to handle large gains on
low priced stocks. Should I use last horizontal support,
trend lines, moving averages, bollinger bands, or what??
simply put it up for a sale with your ask price...NOT A
STOP...just simply telling the world "I want to sell at 1.54"...if
the "market-maker" (do they still even exist?) or anyone else wants
it bad enough, they will take it! When you set a stop, you let them
do whatever they want...there's nothing you can do if they decide
to run it so that's a risk you must take i.e. it will trade lower
and you'll never sell.
Setting stops when long low priced stocks
Posted by RichieD on 10th of Mar 2011 at 06:58 pm
Help! I'm finding it difficult placing stops on low priced ($1.00-$2.00) stocks that have done well for me (gains of 30-40%). Most have large spreads between the bid & ask. Want some protection but don't want to give up 1/3rd of the gain doing so if the market maker is willing to take me out. For example, I bought a volatile Nasdaq stock with a rounding base at $1.06 about a month ago. It ran to $1.60 over a few weeks time, then stalled (went sideways) on lower volume while digesting that monster gain. The bid/ask frequently shows a $0.18-$0.20 spread (especially overnight). So at $1.60 last price and not moving higher, it might show $1.46 bid, $1.64 ask. I'm willing to accept being stopped out at around $1.54 in exchange for the upside potential (another burst of $0.20 or so), but fear if If I put in a stop loss at that price, I'll be immediately be taken out by the market maker before the stock reverses higher to meet the ask.
Looking for suggestions on better ways to handle large gains on low priced stocks. Should I use last horizontal support, trend lines, moving averages, bollinger bands, or what??
Answer to RichieD re "setting stops..."
Posted by pdani on 10th of Mar 2011 at 11:13 pm
simply put it up for a sale with your ask price...NOT A STOP...just simply telling the world "I want to sell at 1.54"...if the "market-maker" (do they still even exist?) or anyone else wants it bad enough, they will take it! When you set a stop, you let them do whatever they want...there's nothing you can do if they decide to run it so that's a risk you must take i.e. it will trade lower and you'll never sell.
If your broker has the
Posted by frtaylor on 10th of Mar 2011 at 10:35 pm
If your broker has the ability, just set a contingent order using the stock price itself as the contingent. Fidelity has that capability.