soosta said:
Well let's say that you buy something that's trading at 1000. You place 50p a point on it and set the stop loss at 950.
If the security drops down to 950 you will automatically be stopped out and would have lost 50p x 50 points = £25.00 (subject to slippage). It's a way of limiting your losses.
Most do and, yes, it is wise for beginners to use a guaranteed stop loss.
Satori said:
Thanks for the reply. I think you mis understood me. I know why one would use a stop loss and how they operate. I do not understand how a stop loss cannot be a guaranteed stop loss however. What is the point in a non-guaranteed stop loss and how do they operate? For example if the stop of 950 was breached and tumbled to say 970 and you were not stopped out of the trade.
FetteredChinos
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non-guaranteed stops are basically normal stops, that therefore get affected if the market gaps suddenly on massive fundamental/political news..eg, London Bombs, Sadam Capture, Atrocious payroll news etc..
guaranteed stops, i believe, will get you out at the price you specify. normal stops will get you out at the first available price after your SL was triggered.
i think that is what you were after?
fc
guaranteed stops, i believe, will get you out at the price you specify. normal stops will get you out at the first available price after your SL was triggered.
i think that is what you were after?
fc
barjon
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soosta
the sb companies (and other brokers) have to protect their position in case the market has a shock drop which doesn't enable them to cover the position.
following the example: the instrument is trading at 1000 with your stoploss at 950 and the next day the market opens at 850. Thus there has been no opportunity to trade at 950 and you can't expect your sb company to satisfy it at that level since they have had no opportunity to cover it. In these somewhat extreme circumstances you'd have take the best price available - 850. They will do guaranteed stop losses but they will charge you for the privilege, usually via a much wider spread.
hope that helps
jon
the sb companies (and other brokers) have to protect their position in case the market has a shock drop which doesn't enable them to cover the position.
following the example: the instrument is trading at 1000 with your stoploss at 950 and the next day the market opens at 850. Thus there has been no opportunity to trade at 950 and you can't expect your sb company to satisfy it at that level since they have had no opportunity to cover it. In these somewhat extreme circumstances you'd have take the best price available - 850. They will do guaranteed stop losses but they will charge you for the privilege, usually via a much wider spread.
hope that helps
jon
