Use Stop Loss Orders to become a Professional Investor
Vero Beach, FL, November 30, 2016 (Newswire.com) - According to Certified Estate Planner™, Fraser Allport, the first thing to understand is what Stop Loss orders are. Stop Loss orders are intended as a Hedge Strategy: They are "Downside Protection" in the event that the Asset you own declines by a certain percentage.
"It is important to determine, ahead of time, what price to sell at to avoid large paper losses. Stop Loss orders are customized for individual situations," said Allport.
Professionals like Fraser use Stops to manage Risk, limit losses, and lock in Gains.
Watch for hidden fees. Different stockbrokers charge different rates for these orders. Various Online Trading Firms offer Stop Loss Order execution for under $10 per transaction. Stop over-paying Fees!
The next thing to understand is how Stop Loss Orders are structured. During his radio show, Fraser explains these hidden fees, and how different stock brokers charge different rates for these orders. In addition, he discusses various Online Trading Firms that offer Stop Loss Order execution for under $10 per transaction. Listeners will learn how to stop over-paying Fees and the Professional strategies to verify transactions, and to never assume a Stop Loss order has been filled successfully. Fraser Allport's show explains how individuals can double check the trade within minutes to confirm that the order was filled correctly, and in its entirety.
Listeners to Fraser's iHeart Radio Show will be able to understand that Stop Loss orders are individualized for individual Portfolios, of course. And Fraser shares that Professionals often use ranges from 5% to 10%. In other words, if a stock is trading at $100, the 10% Stop Loss Order would automatically sell your stock at $90.
"The main purpose of Stops is to avoid large paper losses. Professionals also use Stop Loss Orders to "lock in" Gains. For example, if an investor bought a stock at $100, and the stock was now trading at $120, the investor could place a 10% Stop Loss Order to sell the stock at $108, thereby locking in an $8 gain," said Allport.
Fraser Allport's show defines how to use "Trailing Stops", to follow the stock higher, allowing you to remain invested, while simultaneously having a protective Hedging Strategy in place.
Professional investors also pay attention to the "Beta" of the Asset to be placed when a Stop is put on. Beta is a measure of Volatility (i.e. - price change). The Asset's Beta is helpful in determining an individual investor's Stop Loss Strategy. It is always smart to examine a Chart of any Asset an investor owns. Analyzing the Charts is referred to as "Technical Analysis." Like a road map, learning how to understand Charts is one more tool for becoming a Professional Investor.
There is an old maxim on Wall Street: "Every 90% loss … started as a 2% loss." Stop Loss orders do exactly what they say. They stop the losses so that investors don't suffer substantial paper losses.
Please contact Fraser to learn more about Stop Loss Orders and Technical Analysis. Call Fraser at his Vero Beach office: 772.643.4850.
Click Here to schedule a complimentary 15 minute consultation with Fraser in his Vero Beach office to review your Financial Planning. Learn more at: www.safeandsmartmoney.com.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities nor shall there be any sale of these securities in any state in which such solicitation or sale would be unlawful prior to registration or qualification of these securities under the laws of any such state.
Safe and Smart Money, LLC - A Registered Investment Advisory Firm in Vero Beach, FL
Source: Fraser Allport - The Total Advisor™