Hi all - first post to this forum, and please forgive this most fundamental question (and rather long-winded post). I'm completely new to trading but have read loads of stuff on the Internet etc. I've also read a book called Champion Trader which I see gets a mixed reception here. I've set up a paper trading account with Capital Spreads (and already lost some virtual money!)
Anyway, I understand the concept of stop losses (I'm likely to be a cautious trader) and I understand that a stop loss can be guaranteed ('limited risk' is the same, I think?) and the example I saw was that you enter the market with, say BP, but during the night there is a fire at a BP refinery so in the morning BP stocks might be catastrophically down. As I understand it you'll be okay in this scenario if you have a guaranteed stop loss, but if not your stop loss only becomes operational when the market opens - and you will make substantial losses.
So far so good.
But then someone tried to explain the disadvantage of a guaranteed stop loss, and this is where my lack of understanding comes to the fore
. Apparently shares in the UK market are influenced during the night by other markets around the world (particularly the US) so that prices may fall and trigger your guaranteed stop loss even though by the morning share prices may have rallied. That's what I don't understand - how do UK shares continue to move when the LSE is closed? Is it because the UK shares can be traded on other open markets around the world even though the LSE is closed?
I've tried to find an absolutely fundamental guide to how it all works but without success. A basic explanation of the mechanics of it all would be much appreciated...
Many thanks, G
p.s. Swing trading seems right for me, and I found this site, which I think is excellent -
Swing Trading Guide | Learn How to Trade Stocks Like a Pro! Anyone have any thoughts on this site?
Anyway, I understand the concept of stop losses (I'm likely to be a cautious trader) and I understand that a stop loss can be guaranteed ('limited risk' is the same, I think?) and the example I saw was that you enter the market with, say BP, but during the night there is a fire at a BP refinery so in the morning BP stocks might be catastrophically down. As I understand it you'll be okay in this scenario if you have a guaranteed stop loss, but if not your stop loss only becomes operational when the market opens - and you will make substantial losses.
So far so good.
But then someone tried to explain the disadvantage of a guaranteed stop loss, and this is where my lack of understanding comes to the fore
. Apparently shares in the UK market are influenced during the night by other markets around the world (particularly the US) so that prices may fall and trigger your guaranteed stop loss even though by the morning share prices may have rallied. That's what I don't understand - how do UK shares continue to move when the LSE is closed? Is it because the UK shares can be traded on other open markets around the world even though the LSE is closed?I've tried to find an absolutely fundamental guide to how it all works but without success. A basic explanation of the mechanics of it all would be much appreciated...
Many thanks, G
p.s. Swing trading seems right for me, and I found this site, which I think is excellent -
Swing Trading Guide | Learn How to Trade Stocks Like a Pro! Anyone have any thoughts on this site?
