I’m not sure if I was the only one on Tuesday that was extremely euphoric going into $26 and was just shocked during the whole sell off…i was almost in a paralyzed state which prevented me from selling. Not sure if anyone has tips on how to combat that in the future.
I typically set a specific percentage goal with plays however I treated this stock differently since the setup was golden…“the best setup since GME, AMC” (this is what i believed after doing my own DD, not influenced by anyone in the server). Seeing my account go up thousands per minute is something I’m not used to and seeing that come and go so quickly is what I’m trying to correct for future plays.
Update: after today’s second knife (1/18), I am pleased to have taken everyone’s suggestion to set stop losses which preserved my principal + a bit of profit
For me, setting and updating my stop losses helps. I usually don’t touch and move my stop losses when the stock is going down and I move it up when the stock moves up. You just have to make sure that you give yourself enough breathing room and leeway so that you don’t get stopped prematurely. I usually like putting it just right below the most recent strong support level
I’ve said it this whole week but here it goes:
With this much volatility, people have disagreed with my sentiment on setting trailing stops or even solid stop losses, but in my opinion that’s really the only way of taking emotions out of these sentiment plays. Setting a trailing stop by a certain percentage or points, or manually moving up your stops so you at least break even (or even get out with profit). There’s no way with emotions that high that you can react fast enough to put in a limit/market order, unless you’re experienced and have been through these types of situations before.
Like others have said. Set those stop losses. Practice creating them with not quite so volatile tickers so that you can get used to setting them up quickly after entering a position.
Stick to your stop losses and don’t hesitate to smash that sell at market button if needed.
I’ve found that when I let a stop loss do the selling, my trades usually fare much better. When I have a runner, I’ll typically set a trailing stop loss at anywhere from 5%-10%. This way, you can capture further gains and also protect what you’ve made so far. I’ve also found that it’s better for peace of mind, since I don’t have to be checking my account every 30 seconds to check on my positions.
You just have to be okay with not selling at the very top, which IMO is kind of a fool’s errand. Of course, that’s easier said than done lmfao. It’s weird how you can even get FOMO on successful plays - thinking stuff like “man I wish I put in more” or “damn I should’ve waited for more gains”.
How do you modify your stop losses when playing with options or other leveraged derivatives? E.g., say you’re fine with a 5% loss when buying shares; if you’re playing with options that provide (for example) a 5:1 leverage, would you still place a 5% stop loss considering that a tiny dip in the underlying may prematurely trigger your stop loss?
5% is a pretty small amount. My stop losses are based around what I’m comfortable as the ebb and flow of the stock price. You do have to take context into account when setting up a stop loss.
Optimism bias can really prevent us from selling and locking in profit when multibaggers run, and then paralyze us when the knife falls.
I’ve found it helpful to sell enough of my position - usually a third to a half - to get most or all of the initial capital back. Once capital is preserved, I find I make more rational decisions because the pressure is gone, as at that point, I am playing with house money.
For this remainder of funds in play, as commentators above have noted, a trailing stop works well. We just need to make sure the stops are not too tight, as volatile plays sometimes need a bit of room to flail around as they move up.
This may reduce the returns of any one trade, but over the long run, capital preservation adds up. After all, a 33% drop in capital means I need a 50% bounce to make up lost $$$.
I agree with a lot of what is said above. On a normal trading day, I use stop market orders on my call or put scalps to force myself out or lock in profit as profit goes up, I move my stop market order higher. On fast moving plays I often watch them a lot and hover over the limit sell to lock in prices I like. Covering cost like others said and selling when you see green candles weaken also helps. In short, always take profit and don’t try to chase the perfect sell at the top. It takes a ton and sometimes years of trading to time most peaks and even the most experienced and fast traders don’t always hit them. Any Profit is better than going negative when something knifes.
For an option, what value does the stop loss actually use to trigger it’s execution. i.e is it the bid, ask or last?
I had a $2.10 stop loss set for my essc 12.5c today. When the knife hit, they sold for 1.55 each. I happened to have my eye on the spread at the time and it looked like they executed just as the ask hit $2.10, but this may have been coincidence from how hard it knifed. Thoughts?
You can use a sell limit order which allows you to set a stop price and a stop limit. The stop price will trigger a sell limit order at the limit price you set.