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Two points come to mind here, wrt the markets. 1) All the volatility happened in the after hours. If you just ignored the markets when they were closed, today
by chollida1 10y ago
Two points come to mind here, wrt the markets.
1) All the volatility happened in the after hours. If you just ignored the markets when they were closed, today you are pleasantly surprised, assuming you are the typical long only investor. Don't watch the markets, especially in the after hours.
Heck don't watch them on a day to day basis unless its in your job description. Life is stressful enough that you don't need to watch what your google/amazon/etc RSU's will be worth on a daily basis.
2) There is an order type called stop loss. These were useful in the 90's but haven't really had a good use since about 2005.
They allow a user to "lock in gains" or halt losses by being an order that is triggered if the markets hit a certain level. Essentially the order isn't live until its limit is crossed and then the order becomes valid.
Unfortunately if markets move alot you can get your order hit to close our your position during a momentary drop or flash crash.
Nowadays with market's more likely to have short term volatility stop loss orders aren't really an order type that anyone should use, ever.
The NYSE and Nasdaq are doing away with these orders but alot of regular investors with self directed accounts have been brought up thinking that using a stop loss order is a good idea.
it never is...ever.
http://www.marketwatch.com/story/nyse-joining-nasdaq-in-eliminating-stop-orders-2015-11-18 http://www.marketwatch.com/story/nyse-joining-nasdaq-in-elim...
- pbreit 10y agoRe #1, but that was all "real" market activity, right? Was it mainly that overseas traders were just a lot more pessimistic?
- matwood 10y agoIt's real, but volume is typically much much lower so it tends to exaggerate in either direction. I stopped trading futures at night because lower volumes messed up my strategies.
- pbreit 10y agoThe volume on S&P and DJIA futures surely is sufficient to be legit?
- totalZero 10y agoThe only part that wasn't real was the fact that the futures hit the limit-down circuit breakers, which means the market wasn't totally free. Otherwise, yeah. That's real money. A bunch of people overreacted and sold SPX 6% lower than where it closed the next day. Potentially they were hedging derivatives, but either way, frantically selling in a sliding market is not a position you want to be in.
- deleted 10y ago[deleted]
- hammock 10y agoCouldn't they be replaced with some sort of time-weighted system. Sell at 10% down only if it's been 3 hours or more...otherwise sell at 20% down. Something like that
- tedunangst 10y agoBut then you won't get out before the next sucker...
- yueq 10y agoPeople were watching index futures rather than A/H trading. Also stop loss order still has lots of value instead of blindly buy-and-hold.
- matt_wulfeck 10y agoBlindly buy and hold has actually been a pretty good investment strategy for the last few decades. Besides, not watching or worrying about your stocks has benefits on your sanity as well as your wallet.