Bulls To Bears: Outlasting A Stock Market Meltdown

As a stock trader and investor you must realize that big market sell offs are an anticipated and a healthy part of investing in the market. It make good stocks cheap. As a smart investor when you are concerned about market risk you can use tools, tricks and trading strategies to help protect and hedge your investment portfolio in uncertain and uneasy times.

You have to understand since the inception of the stock market it has been true that what goes up does come down, and what goes down usually comes back up, and way up! The market has always made higher highs - but has never gone to zero. Although the stock market has continued to hit new highs this year, it has often been subject to periods of declines and downturns. When the market is a steady green investor confidence is high, and when red then fear sets in, especially when changes happen fast. You will learn to become a better trader when you're trading with a long-term aspect on the market, only then will you will be on your way to real wealth creation. Especially, when your under valued stocks come off their lows to begin to trend higher. But, not if you sold your holdings and walked away. 

Most online traders like to use short-term plays to profit, but you have to understand, as an investor, that these play will eventually work out, but they are subject to take a bit more damage during volatile times. Stocks will forever rise and fall, occasionally by substantial amounts. That is the game. When the market is increasing in prices over a lengthy period of time it's called a bull market. When it decreases substantially like 10 to 20 percent it is a called a correction, a bigger decline of more than 20%, is considered bear market territory. These 3 movements are all a part of the stock market stages and its life-cycle.

When trading the market, big ups and downs tended to balance each other out over time. As a general rule, up trends in the markets have always outweighed periods of declines. Because of this, stocks have had a stronger performance of any other investment class, even real estate, over the long haul. But, remember past performance does not guarantee you any future results.

If it were just as easy as simple math, it could be very easy for any investor to just sit and wait out the market sell off for its recovery. But it is not that easy. It is how investors react when the market declines, as it spooks investors, that is the key to stock trading success. Don't be that trader that when your stocks begin to free fall, you act irrationally and start making poor trades and bad decisions, negatively affecting your investment returns.

Knowledgeable investors who are a bit savvy enough tend to take the necessary steps and prepare their portfolios for occasional market declines. These investors are better composed when managing their emotions in times of stock prices decline. But, investing too conservatively may contribute to them not reaching their profit targets. 

Just as we've seen in previous market sell offs, many individual traders continue to make bad trades, they keep selling good assets when the market declines, only out of fear, like the stock market will never, ever recover and come back. However, the opposite is always ringing true. Not only will the market come back, but it will probably happen a lot sooner than one might think. When the pundits are predicting there are further corrections ahead, the reality is NO ONE can predict the future of the market. But one can certainly use past experiences to help gain an understanding about current market conditions. So in this blog we are trying to explain how market corrections typically work, so you can get off the sidelines and invest in your future.

Recognize, investments of all types involve risk. Because the stock market was on a huge tear, investors now are sensitive to downward trends. So when this market recently corrected, the result was met with fear and uncertainty, and a lot of investors pulled their money out of the markets. But just how long should that last? How low can it go? Since the current correction is still in progress, we’ll look at past market data, which is the last market correction on record, 2016. While a good portfolio anticipates all possibilities from the outset, you can improve your stock trading at any time by subscribing to our service and by implements some of our stock trading methods. This isn't our first rodeo.

As a long-term investor, you shouldn't be focused on short-term volatility. You need to make the long journey a little more enjoyable by implementing a few simple steps during a market correction like this. You will face some risks as a holder of stocks and mutual funds during periods like this, and we have a few ideas about how to substantially reduce your chances that your portfolio suffers big long-term losses during times like these.

We are not there yet, but unfortunately bear markets do take a little longer to recover. But good news is they will and do eventually recover!  But emotions, fear and human nature are tough things to overcome. So while ignoring market corrections and bear markets and staying the course is the right thing to do, it doesn’t necessarily feel that way when markets are uneasy and volatile. So our advice: do not go  at it alone! Use a battle tested service like BullsToBears.com to guide your decisions, and remember that making better stock trades as well as going slow and steady when trading stocks will always win the race.

Bear in mind, if you a day trader, swing trader, short-term or long-term investor you can't help but benefit from subscribing to our FREE NEWSLETTER. Our trading methods and tips, are there for all traders and investors to explore. We also offer a 14 DAY FREE TRIAL so you can learn for yourself about market structure, trend identification, market volatility, volume, where and when to trade, and how we put it all together, so that you can have a winning edge.

Remember, the time is NOW to invest for your future success! 

Till Next Time... Happy Trading!

Bulls To Bears: Trading Post Market Sell-offs

After this most recent stock market decline, it has left many investors feeling very anxious about trading stocks, but we promise it's going to be ok. So, take a deep breath and exhale! This latest sell-off feels a bit more unsettling because - it’s been a while since investors have experienced this type of volatility. Last month's gut wrenching big dip was the third one this year, similar market moves like this typically happens about 2 to 3 times a year. This last sell-off appeared different to us, because it seemed to look more like investors were in some sort of a panic selling mode and that many novice investors were implementing bad trading habits and making irrational investment decisions.

 

Last years big movers like NVDA and BIDU recently have had larger than normal declines  that lasted over multiple days. When events like this happen in the market and to your stock holdings, as a good stock trader, you have to be on the lookout for the future bounce that is going to occur, when it is going bounce back. It's ok if you miss the first bounce when it begins, but you should be on the hunt to trade the second bounce after the initial bounce occurs. 

We tell our subscribers to never sell their holdings out of fear; instead, to be more selective about how you trade stocks during periods like this. So, if you feel the market cycle is nearing an end, take into account the current stock markets factors and  dynamics when making new allocation decisions. Diversify your portfolio to include sectors with strong growth prospects (like infrastructure), read our research reports because when the market sells-off, you need to understand what is happening and what assets you need to be buying. If you subscribe to our service we will show you a few ways you can play a dead cat bounce, and how we manage to pull out some serious returns after steep market declines.

 

Take a step back from the recent declines. The majority of the numbers that came out suggests the U.S. stock market is still dead center in the middle of the longest-ever bull market, with the S&P 500 more than quadrupling itself already. When the Bear-market rallies it tends to be quick and robust, so we’ll see how this last decline plays out. But, if we are heading into further bear market territory, a big bounce will take a bit more time to transpire from its yet impending bottom.

 

Many traders for the most part don't seem to notice when their stocks are moving higher over an extended period, but the market’s got a way of getting their attention when it goes down. Nevertheless, learning to tune out all the noise, and all the hysteria, is the winning combination to long-term success in the stock market. And as we've stated in a few of our previous blogs, that a major key to our successes is our ability to be buying quality stocks during periods of declines - rather than selling steep sell-offs. Because buying rather than selling  during those times usually presents you with a much better opportunity for prosperity.

 

Having the insight and leap of faith to lower you stock price average is an unrecognized perk of big market sell-offs. If your investment strategy warrants, and you have some liquidity to invest - that is probably a very good time to consider adding to your existing stock holdings or find some  new gems. However, take into account and be prepared for some possible uneasiness: as your assets could fall further still - that is until the selling stops and the buying begins again. 

 

Buying stocks before the proverbial breakout is one of the most sought after common stock trading strategies, but if your are new or a novice to trading stocks or have little experience trading market breakouts, you may find that they're not as easy to trade as they appear. Often the breakout turns out to be false breakout, which could have you losing some more money. But, if it is a real market breakout, that bounce will provide you with great entry levels and better dollar cost averages.

While there’s no “Right” time to playing the market! When the market is down big, it tends to make us feel like it is always the "Wrong" time to be trading. But, you need to fight those fears away and keep investing. Keep looking for good valuations. With the vast majority of asset classes and sectors in the red right now, you have a lot of attractive alternatives for investing into 2019. So, it's prudent to continue to practice good trading habits now and bet on the stock market’s proven history of recovery, as a long-term investment theorem.

 

A plethora of strong profits reporting from companies like software legend Microsoft, to social media giant Twitter, as well as electric car company Tesla and behemoth AMZN, confirms the overall strength of the U.S. economy and the U.S. markets. We believe more strong results will be forthcoming in the next few days and weeks and months that will re-affirm our convictions that the market will rebound and/or hold these current levels.

 

Recent  investment declines didn’t just stop with stocks!!! Right now, Gold & Oil, as well as Bonds are among big downed assets this year; in fact, over 90% of 70 asset classes tracked by Deutsche Research have posted negative returns in dollars, up through the mid-term November elections, according to The Wall Street Journal. In fact, traders haven’t observed this much RED in the market in about a century.

 

Taking everything into account... If you are as optimistic about the U.S. economic growth, as we are, current market volatility should serve as an opportunity to buy stocks at good cheaper prices. Use this dip to buy better stocks, that will move up with the overall economy, or consider selling some low quality investments, offsetting some gains (this is known as harvesting tax-losses), to make room for better ones. Don’t miss an opportunity to make a lot of money for yourself now. Don't exchange a chance to prosper, for your own personal set back, by not taking advantage of cheap stocks in the stock market at this point in time.

Now, if you want to earn big profits, and want stop spending so much time trying to figure out what stocks to buy, sell and trade! We’ve got it covered! Start today by utilizing our 14 DAY FREE TRIAL, we will show you during that time how to reduce your downside risk, and teach you when it is time to add to good, or yet cheaper stocks in your portfolio - instead of selling them, and then you will be looking at a lot more profits for yourself.

 

Thanks for visiting... Till next time... Happy Trading!

Bulls To Bears: Trading Psyche And Mindset

Traders have been dealing with a bag of mixed signals lately. One second the market’s on fire - the next second it's cold as ice. It comes on strong - then the drop. The one thing that stays the same, is that traders are always on the hunt for big profits. They get exhilarated when their stocks make money and lose enthusiasm for trading when they lose money. This is a very bad trading mindset. Traders will have the success they seek more often when they act like they are in the market for long-term. When a trader gains a better understanding of why those trades are down, and losing short-term value - they will begin to trade more effectively.

 

Your state of mind and they way you think about the markets, plays an absolutely critical role in your ability to make better trades and succeed at trading the markets. We are talking about discipline, a general sense of self-control. Typically, traders with good levels of self-control in other areas in their life, make better overall investors. So, if you are someone who is very irrational or disorganized, or otherwise lack other forms of self-control, you will need to fix your mindset and overall trading psyche if you want to succeed and make money trading stocks. It is extremely tough to be a highly controlled person trading stocks if you're not controlled in other areas of your life as well.

 

If you're not a person of high self-control then you have to re-train your brain to be a person who thinks counter intuitively. What that means is, you have to think different from the multitude of stock traders who fail, the “flock” of sheep, so to speak. When the market looks like it wants to breakout, making higher highs, it’s likely to be a false breakout, and a majority of novice traders get sucked right into that false breakout, only to get slammed by  the downturn when it materializes. This is another one of many examples where a market looks great and even ‘feels’ great like it’s going to continue to surge higher, and just when almost everyone is onboard and "drinking the kool aid" the market tanks and reverses and moves sharply to the down side.

 

We are not suggesting that you can always avoid losses with this theory, not at all. What we are suggesting, is that experience tells us when you are patient, and maintaining good trading habits, not acting with haste, you have better trading successes. We feel that trading should be viewed and treated like your own business. Your trading methodology should also be your business strategy when trading the markets. You should include things like, better trade setups, and risk management plans, stop loss protection, profit target executions, trading convictions, etc.. Any successful business has a strategy and a plan of execution in place. You should do the same with your trading business. If you don’t have an investment strategy and plan then you’re really just throwing "darts at the wall." That is not intelligent investing.

 

Whatever your current trading plan is? It needs to be reinforced on a regular basis, so it becomes part of your winning trading mindset. The Bulls To Bears trading strategy the one we teach in our program is essentially a “K-I-S-S” approach. Keep it simple silly! This is all built into the BullToBears.com trading plan and we teach it daily and try to reinforce it into our subscribers trading psyche.

 

To be a better than average trader you must truly believe in your own ability, as well as your trading strategy. As I mentioned before, in other blogs, there's no room for hesitation when placing trades if you want to succeed long-term in the market. But, don't ever get overly confident, as too much confidence in any trader could end up being a very humbling experience.

 

Very successful traders think differently from most traders. They act differently too. They are more planned and structured than most people. Winning traders are not easily distracted from their trading strategy, from the long-term reward, regardless if the market is up 2000 or down 2000 points in a day. We teach our subscribers to have long-term and short-term goals and after a while they learn to tune out all the noise. They continue and build up short-term goals, and this eventually leads to the long-term  success. They are focused on continuing on, moving forward and learning the game. They are rewarded when staying focused and executing their trading plan with discipline and precision.

 

The power you can acquire as a savvy trader with a structured daily trading routine cannot be exaggerated adequacy. Repetition is how you form better habits, these habits will either make you or break you and determine your trading life span. That depending on what your knowledge and experiences are... What does your stock trading routine consist of currently? Do you even have one? If you aren’t sure, then you don’t. You should be able to explain in- depth what your daily trading routine is and you should have a specified understanding for analyzing the markets each day.

 

So, the remaining questions are... Are you ready? Are you really ready to become a better, a stronger and more effective and successful version of yourself? This only YOU can decide! If your answer is yes, then you better get ready to make some meaningful changes because nothing different is going to happen without change.

At BullsToBears.com, you get Personalized Trading Strategies to help you reach your financial goals online & over the phone. We will help you Plan Your Goals and Help you Invest In Yourself. Start today! Get Quality Stocks signals and More with Our Free Trial offer. Help us to help you.

 

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Start placing better trades today! We hope to see you soon!

Till Next time... As always, Happy Trading!!!

Bulls To Bears: Surviving Choppy Markets

Investors are always searching for robust returns as well as consistent gains on their investments. When the market is weak, dealing with heavy sell offs and a declining stock portfolio isn't anyone's idea of a good time.

They are called selloffs because investors react to these big declines by panicking, liquidating and selling off  stock positions. We see this happening over and over again despite investors having  held top quality companies with good fundamentals within their group of holdings.

Professional seasoned investors will tend to do the very opposite. Through experience they have learned to see a big correction or huge downturn as a chance to review their risks within their portfolio and take that opportunity to add to good positions creating a cheaper entry price rather then selling into that weakness. 

When confronted with adverse market conditions like big sell offs, whether or not it's a one-day decline or longer, an investor must take the time to review their portfolio and access the collateral damage occurring. Having to deal with your portfolio during market volatility may be burdensome, but an important necessary task. We comprised the paragraphs below into a few suggestions that will help you and your trading account survive big market declines like the one we just witnessed that wiped away 2000 points on the Dow, all of 2018 gains, in about 20 trading sessions.

Have long-term goals etched in the back of your mind. The one thing for certain we can GUARANTEE our followers is that regardless of what your stock holdings consist of, the stock market will forever experience volatile moves ups and volatile moves down. That is the main reason why it is important to keep emotions in check and stay focused on your long term trading goals. Having a buy and hold strategy and holding that course steady - despite short term choppy market moves, will most likely determine the difference between profits and losses. While the very opposite of  this strategy is to Day Trade stocks and try and figure out what the market will do today with in the next few hours. Bulls To Bears as well as most investment professionals will tell you it is very risky trading, not to mention if your predictions are wrong, it could cost you a lot of your money and you can miss out on a particular company's best days that are ahead.

 

Keep on top of your trading accounts and individual holdings. With all the wild events happening in the world today, almost on a daily basis, it should call attention to the importance of knowing where your assets are and keeping diligent observations. You must keep in mind that periods of falling prices are an integrated part of investing in the stock market. We guide our followers and help them to use a multitude of trading tools, to hedge against market declines like stock options, to assist their portfolios against sharp and unexpected drops in the stock market. Also, by making better stock trades one can constantly reevaluate what is happening while at the same time limiting overall risk to positions.

 

The Stock Market is a difficult ocean to navigate. We recommend talking with an expert. A professional trader will assist you and help separate you from emotion driven decisions and will prohibit you from making bad trades, that will deter you from your overall goals. Researchers within the investment field of behavioral finance have found that emotions typically lead investors to make very bad trades when those erratic unexpected daily events occur - even though those averse market events in the end didn't have negative long-term adverse consequences. With the aid of a financial professional, you can sort through these short term distractions, and you'll likely find out that if your investment strategy made sense to you before a particular event occurred and shifted the market, it will make sense afterwards when the dust settles as well. Panicking is not a very smart trading strategy!

 

At Bulls To Bears, we scan the market weekly for the emergence of meaningful discounts. We love when stocks sell off and turn pricey quality stocks into less expensive ones. Stock corrections help to keep valuations in line. These corrections do not mean the Market is going to zero. In rough times, if possible, get some cash and boost up your buying power. Or when the market is topped out and your stocks continue to hit record highs, take some profits off the table and build some cash reserves. You might also want to sell some underperformers for cash and when the market finally takes a big hit, use it to pounce on better bargains.

 

As a wise BullsToBears.com member, you will learn to actually welcome market sell-offs, because they provide an opportunity to pick up good stocks when their share price is lowered and on sale before they eventually begin to move in the right direction again, higher! By utilizing the market by buying stocks and selling others our program will help you keep a bit cash on hand, so you'll be ready to buy when other stocks go on sale. Thus turning a market drop into a good trading opportunity. So when the markets get slammed, great stocks usually get caught in the downturn and that is the time to swoop in a buy them.

We agree with Warren Buffett's overall investment strategy when he says: "Be fearful when others are greedy and greedy when others are fearful."

By and large, stop getting bent out of shape by stock market sell offs. Instead put together a diversified stock portfolio of quality stocks and options. Try and avoid purchasing to many speculative stocks, or investments with an uncertain future and low volumes. When you do that you will be less likely to panic during market routs with better stock portfolio holdings. Because of our 16 year track record, we are confident our members will survive, no matter what the economy or market throws at them. By continuing to place better trades - when sell offs occurred our existing clients thrived in good times and survived in bad.

 

To conclude, whether you are a day trader, swing trader, long term or short term trader, we encourage you to join Our Free Newsletter. As a stock trader you'll benefit from our wealth building information that could help you profit and protect your investments from the next stock market surge or sell off.

Utilize our 14 Day Free Trial Offer. Our FREE trial is a way to get your foot in the door and see first hand how our investors benefit from our buy and sell alerts. Just so you know - if you choose to take advantage of the trial - you do not need a credit card to enroll - Just fill in the information and you all set.

"We hope to see you soon!" 

Till Next Time.... Happy Trading!!!

Bulls To Bears: Investing and Cost Averaging

Cost averaging or "averaging down" is an investment strategy used by investors to accumulate shares of a stock strategically based on per share price. A investor purchases more shares to add to a position of existing shares when prices are cheaper or when prices are higher, whenever they add to their position either as prices are more attractive or if the stock price increases. 

Dollar Cost Averaging is highly successful stock trading strategy that allows an investor to put additional money into a particular company to build a larger position over time. The purpose for this method might be to lower the total average cost per share of an investment, giving the investor a cheaper overall cost per share on the investment  by adding more money to previous purchased shares.

 

This strategy is actually a very smart one and can be a great method to earn big profits, but requires some discipline on the part of the investor. The “cost averaging” part of the equation is mostly a byproduct of market volatility: investors are able purchase less stock as prices go higher, and more as they go lower, therefore averaging down on the cost per share at the correct times when it occasionally dips could be extremely beneficial when the investment rises and having owned those addition shares.

 

Another positive aspect of DCA is that it allows investors to avoid investing too much into a stock when it is priced too high and helps traders add to a position when the stocks price is lower, thus reducing overall price per share. However, this method of trading ignores simple logic, common sense would suggest it's better to invest it all at once. Fortunately, smart investors and advisors do not always base their decisions on logic or evidence. However, when it comes to trading the stock market investors emotions usually plays a far greater role in decision making than logic.

 

Dollar cost averaging is an important trading strategy, but it should never be viewed as the only way of maximizing profits, nor does it suggest that you never invest a lump sum as part of your investment game plan. Relatively, it should be regarded as a solid risk reduction strategy suited for investors who are normally cautious in regards to a long term investment approach, because of the fear of market instability.

 

When markets are weak and sinking it can be difficult to foresee a clear path to take. Sensibly, people get worried when experiencing a big decline in the value of their holdings, but by staying focused and maintaining your trading strategy and averaging into your current investment can be intelligent valuable decision.

 

The main reason we tell our subscribers to average down is when they can bring down their average cost of a stock they are holding quite substantially. Assuming of coarse we believe the stock will turn around, this decision will ensure a lower break even point for the stocks position and could result in much higher gains in dollar terms, than would be the case if the position was not averaged down, in the event that stock surges in price.

 

When averaging down works, it's because the investor is willing to hold that stock long enough for it to bounce back. And therein lies the secret to Dollar Cost Averaging. You must have the backbone to hold on long enough for that stock to recover without losing your patience or your shirt first.

 

Below is an example of how dollar cost averaging could be successful when used correctly. Let us use XYZ Inc. and a purchase of 1000 of XYZ at $20 then in 2 weeks the stock falls to $10 by averaging down on XYZ by purchasing an additional 1000 shares at $10 and adding to the other 1000 shares at $20, you can bring down the breakeven point (or average price) of XYZ's position to $15 dollars:

 

•1000 shares xyz $(20) =    $20,000
•1000 shares xyz $(10) =    $10,000
•$2000 shares xyz $(15 avg) =  $30,000

 

No let us pretend that now XYZ stock starts to trend higher and a few weeks later it trades at $18 per share, the investor now has a potential gain of $6000 with an average price per share of $15 on 2000 shares (despite the fact that the stock is still trading below the initial entry price of $20):

 

Had the investor not brought the average cost down when the stock dipped to $10, the potential loss on the position (when the stock is at 18 would be -$2000). So if you’re a novice investor new to the stock market, go ahead and try dollar cost averaging. You might have success with it!

 

Remember, before averaging down on any stock position, it is very important that the company as a whole and its statistics be fully assessed. A trader should make sure whether a significant decline in a stocks price is a short term miscorrelation or a symptoms of a deeper issue at hand. At the very least, many factors need to be assessed - like the company's competitive standings, future earnings outlook, financial stability, and corporate structure.

Bear in mind, at any time you can tilt the odds of success in your favor by adding BullsToBears.com to you trading arsenal. With our trading program you can achieve the best possible results with the least amount of effort by following our stock alerts and proven trading methods. Benefit from our low-risk approach that will leave you no reason to worry. Have more time to yourself to live a more meaningful life.

 

If you a day trader, swing trader, or long-term investor you’ll benefit from subscribing to our FREE NEWSLETTER. Our articles, Trading Tips, are there for all traders and investors to explore our tools and techniques we are show our paid subscribers. We also offer a 14 DAY FREE TRIAL so you too can learn knowledge for yourself about market structure, trend identification, cycle analysis, volatility, volume, when and when to trade, position management, and how we put it all together so that you now have a winning edge.

 

The time is NOW to invest in your future success! We look forward to seeing you soon.

 

Till Next Time... Happy Trading!

Bulls To Bears: Trading and Stop Losses

A stop-loss is a commonly placed market order that's entered to help protect investors by triggering a sale on a stocks position once it reaches a certain price. Today we are going to let you in on a little trading secret. We are going against the grain here and try to explain to you why stop losses are the single biggest factor why most novice and inexperienced traders lose money in the stock market.

The reason behind why most stock losses probably occur, is before a stock trends higher, it typically takes a dip and trends  lower and nervous people sell. It is important for you to grasp that market makers, specialists, and experienced traders are out to make money for themselves or their firms. They are out searching to make money from your inexperience and they all have access to resources, tools and information that you don't.

Now listen, these sharks see your open positions sitting out there and they know that you are willing to sell to them at your stop price (the order is in) and they are searching for these easy pickings, to stop you out and make money from your mistakes. More often than not if they are planning on taking a security higher - they will drop the bid first scooping up your stock taking you out at that stop price. They want to buy it cheap and they know where to get it. Then they will proceed to move the stock much higher and are happy to own your shares that you were offering up for sale. And guess what? Now your out of that trade, with a realized loss!

So, the lesson here is, If your frightened about a trade or scared to lose your money or just uncomfortable with that trade then "sit it out" don't do it. We see this scenario take place time and time again. So, it is better that if you feel the need to have a stop-loss in place, put a looser stop-loss of maybe 30% to 35%, as to not make it too tight so your easily stopped out. There are people out there who are looking for people with tight stop losses. These professionals know the stock market very well and are scouring it looking for tight stops and looking to capitalize off of it. We tell our subscribers to generally try and keep stop losses on the looser side when possible.

Using a stop loss is like going into a casino sitting at the poker table and showing everyone at that table your cards, including the dealer. So don't use a tight stop loss. It is the easiest way to ensure that a wall street professional trader will pick your pocket. We see this scenario time and time again. It is paramount that you understand that a majority of your losses are coming from stop losses that you have in place right before the stocks begins to go higher and you are the loser. I'm sure this has never happened to you?

In our opinion the best stop loss that you can make for yourself are mental stop losses. But you must be diligent and stick to your trading parameters. We will go on the record here and tell you that tight stop losses are the single biggest mistake novice traders make when they start trading stocks.

I will stress it again, market makers have a lot more data and tools at their disposal than retail traders do. They are able see your order entries and they have the power to move the markets against you. Not to mention stop losses can’t guarantee you complete protection against even market losses. But they do increase the odds you will miss out on the upside all together, plus they increase trade costs. Also, there is no evidence to support claims that they produce better results, but there’s plenty of evidence to the contrary. It is better to start to think of stop losses by their contrarian name that describes them better " stop-gains." 

In addition, because stock prices tend to fall so rapidly, most stop losses entered can't be filled quickly enough and many investor's stocks are sold out at prices well below their triggered stop price. We see it often enough, that most stocks will then rebounded quickly, making the situation even more painful for the traders who are stopped out at the bottom.

Another major worry in regards to stop loss orders is once your stop order is triggered, it turns into a market order. In a volatile quick moving market, the stop price could be acquired and the next offer price could be executed substantially well beneath that stop price and it will result in larger losses than initially expected, which is exactly what you were trying to avoid in the first place by using the stop order.

To recap, try to avoid getting stopped out prematurely, you always want to give yourself some wiggle room in regards to your stop loss entries. Otherwise you risk getting stopped out and missing the move entirely, even worse, handing yourself a realized loss costing you money.

That's all for today! Remember you can subscribe to our FREE investment newsletter here that is geared to help traders of all types, both large and small. If your a day trader, swing trader, or short  term investor you'll benefit from the opinions and advice we provide, as well as free tips, offers and up coming promotions.

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Till next time... Happy Trading!