A stop loss is an order to sell a stock if it drops to a certain price. I have always considered them to be a sensible practice, yet have never used them. I'll give some personal examples of how they can benefit, and how they might not benefit.
Rivian stock. IPO was 75 dollars, soared around 125 then plummeted. Currently around 15. A stop loss could have salvaged the loss at the original 75 price point.
Microsoft stock. I was holding the stock when it hit 320 a couple of years ago. The stock slid down to low 200's, but is now over 330. A stop loss would have prevented me from going all the way down to 220, but here's the rub. If I sell a stock I'm less likely to jump back into a stock. Two reasons, first the feeling that the stock burned me and I don't want to get burned again, second the price point to high to consider reentry, and how high do I imagine the stock will actually go anyway.
I would love to hear from people who use stop losses. Do you ever go back to the same stock? Have you felt their use to be worthwhile? How close to current value do you place your stop loss?
Submitted June 22, 2023 at 08:52AM by PsEggsRice https://ift.tt/MJq6dmo
