I have a stoploss in place on my shares but what if?

Question

Is there anything drastic that could happen to the money I have invested in a company on the American stock market. Obviously I have a mental stop loss in place but could anything happen that could make my money rapidly disappear overnight?

Answer 1

Bad news on the company during the night can make the stock gap down the next open. A stop loss becomes a market order when kicked in. So you sell that the gaped down market price.

Some brokers allow you to set stop losses and they hold them until triggered and do not forward them to the market makers.

Answer 2

Of course.

Also, you should know that even if you have an actual stop loss order in that's no guarantee that you'll get filled anywhere close to your price. A stop order simply means that if the stock trades at or below the stop price then the order becomes a market order. If something drastic happens there may not by buyers at any price and the stock will gap lower. There's no telling where you'll be filled.

Answer 3

Mental stop losses are best. Here is what happened to me:

I put in an automatic stop loss for $X.00. The market makers see ALL of the automatic stop losses. When my stock was faltering, it approached my stop loss for $ X.00 and my stop loss was activated, but it's now a market order, and this is when the rats have their fun. The stock plummeted way way way past my stop loss, and they stole my shares for 7% LESS than my stop loss. The do this crap on purpose to steal cheap shares for their buddies. They knock out all the stop losses like bowling pins, and adding insult to injury, only sell your stocks when the price is far below your setpoint. Now they've gathered all of these cheap shares for their friends, left you at a huge realized loss, plus stole your shares from you.
The stock inevitably rises back above your stop loss that same day, or the next day. But your shares are gone, so you can't enjoy it. Essentially, what these stop losses do is guarentee that you'll sell your shares at the day's lowest price. Dont do it, please.
Mental stop losses are the only way to go, unless you're on vacation or something.

Answer 4

Assuming you are long...that is the best place to be. I am confused by your question...If you are based in the UK then nothing is going to happen overnight because the US Markets are not open. Do you have a proper stop or a mental stop ?

The stock could get hammered pre-market, in which case your mental stop is as much use as a chocolate fire guard.

I never trade with "mental" stops. I find my discipline doesn't allow for it. When I open a position the FIRST thing I do is to put a stop in the market. I don't move that stop for anything or anyone.

Answer 5

Ask yourself the question "would I buy this stock today, at the current price ?"

If your answer is 'no' (it's too expensive/too risky) then sell now.

If your answer is 'yes', and the price drops, then for sure that's a buying opportunity, right ?