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> the stocks could fall further before he liquidates that's what "stop-loss" trades are for :p does robinhood not have that?
by Stanleyc23 9y ago
> the stocks could fall further before he liquidates
that's what "stop-loss" trades are for :p
does robinhood not have that?
- jmathai 9y agoRobinhood has stop loss trades.
- zAy0LfpBZLC8mAC 9y agoNo, that is not what stop-loss orders are for. A stop-loss order only puts a sell offer into the market when the market prices falls below a certain threshold, there is no guarantee as to what price someone will actually buy your shares at, or that anyone will buy them at all. If you want to have a hard limit on the loss, you'll have to buy a put option.
- discodave 9y agoEven then you have counterparty risk.
- awad 9y agoTechnically the put doesn't guarantee anything since not everyone is too big to fail but for most purposes this is true.
- ABCLAW 9y agoNot sure why this is being voted down. A counterparty in an option agreement can become insolvent. This is typically analyzed under the name counterparty risk. Much much much less common than a stock going down, but when large counterparties become insolvent, a lot of people start needing to write off big chunks of their positions.
- deleted 9y ago[deleted]
- MichaelGG 9y agoA stop loss with no limit means "if the price hits X, then sell my shares for as low as 0.01/0.001" (same as a market sell order). You can verify this by imagining a single trade below the stop loss, then the only buy order being at 0.01. If you put a limit on the stop loss then there's no guarantee it'll clear, but at least you won't sell for some ridiculously low amount. The exchange might have circuit breakers that won't let a particular symbol change more than X% in a given period of time.