Interesting article in Forbe's mag. (Feb. 2, '09) that puts down trailing stops.
They mention Chuck LeBeau’s smartstops site and they (Forbe's) are generally negative on trailing stops. (I certainly favor them in trading.)
Here’s a link: http://www.forbes.com/forbes/2009/0202/040.html and the beginning:
“Now that the market has crashed, online outfits are scrambling to sell gimmicks that promise to limit future losses. If only investing were so simple.â€
Forbe's: stops are "gimmicks"
Forbe's: stops are "gimmicks"
Last edited by stamo on Wed Jan 21, 2009 11:30 am, edited 1 time in total.
"Problem one is the randomness of the stock market. "
Is it random?
"Contrary to what stop-loss salesmen might tell you, a stock you buy for $20 that falls to $16 is just as likely to go back up as it is to continue falling."
Is it really?
Great comeback by Mr LeBeau btw:
"Regarding his example of selling that house at $180,000. that was probably a good idea. You could buy it back now for $100,000 or less."
Is it random?
"Contrary to what stop-loss salesmen might tell you, a stock you buy for $20 that falls to $16 is just as likely to go back up as it is to continue falling."
Is it really?
Great comeback by Mr LeBeau btw:
"Regarding his example of selling that house at $180,000. that was probably a good idea. You could buy it back now for $100,000 or less."