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How To Lose Money In The Stock Market !

Discussion in 'Shares' started by Tropo, 13th Sep, 2011.

  1. Tropo

    Tropo Well-Known Member

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  2. voigtstr

    voigtstr Well-Known Member

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    I don't how accurate the numbers are but I loved the following bit;
    Prior to reading this, my stop losses were set either at recent swing lows, or just below resistance lines. Thing is I would often get stopped out and the stock would take right off again. It was bugging me enough that for the last year I've just said "bugger it" and called myself "an investor" rather than a trader and just let the market do to my portfolio what it will. One stock is up, one stock is down, and one is flat. After a year my portfolio (including previous years wins and losses (including brokerage and dividends) is up -0.34% (yes a small loss).

    I think this x 0.875 thing is a goer. It provides enough of a gap for volatility, but should still stop you out of something that is tanking. And like the article said "let your profits run". I'm going to try the x 0.875 against each new high and make it the new stop loss. Its seems like a simple approach.
     
  3. Redwing

    Redwing Well-Known Member

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    Keep us posted ;)
     
  4. voigtstr

    voigtstr Well-Known Member

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    I set a stop for ILU. It closed at 18.88 on 30/1/12 (This was the closest high to when I thought I should stop investing and start trading :) )

    .875 x 18.88 gives 16.52

    On 6/3/12 ILU closed below my stop.
    On 7/3/12 during my lunch break I sold ILU at market price (to get out of the position rather than hanging on for a better price) at 15.95.
    On 8/3/23 it was still below my stop... (normally my luck is something will take off to new highs as soon as I sell it)

    I have stops in place for BHP at 33.43 and MND at 21.14.
     
  5. TDFawaz

    TDFawaz Tony

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  6. voigtstr

    voigtstr Well-Known Member

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    I picked up DMP, CSL and CDD on 21/6/12 due to a search of insight trader and these stocks were in an uptrend whereas most others werent. Sold DMP 23/7/12 since it had turned over, was heading about 3/4 to stop loss territory. (perhaps .875 is too wide, and .9375 is a better mark?) Picked up TLS 26/7/12 also due to a decent uptrend.

    So far CDD is up 7.2%, CSL is up 9.85%, and TLS is up 1.28%. Watching a lot more carefully now...
     
  7. mysticblau

    mysticblau New Member

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    For more seasoned investors - in your opinion how relevant is the 'down and out' formula proposed when dealing with long term & primarily blue chip investments?

    As an example I would be confident in TLS shares growing in the long term, if they were to experience some instability, could it be potentially counter productive to sell and reinvest? It seems a more appropriate strategy to those who buy & sell on a frequent basis.

    Interested in your opinions, thanks.
     
  8. Tropo

    Tropo Well-Known Member

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    If you consider yourself a seasoned investor you can try down/out approach and find out how it works for you.
    You can be confident in anything, but it does not mean that you are right.
    TLS is a good example.
    Long time ago (10~12 years), investors bought TLS paying approx. $8 per share.
    If you compare current TLS price you'll see, what passive approach can do to your bank account.
    Unfortunately if stock is pulling back, nobody knows where bottom is and when it may recover.
    That is why investing/trading without a proven system/rules is a recipe for disaster.