A stop-loss order will get you out of a stock if it declines past a predetermined price, and will leave your upside opportunity intact. But stop-loss orders have drawbacks:
1) You arent necessarily guaranteed to get out at the stop-loss price. If your stock gaps down below your stop loss on the opening or after a trading halt, you will get your execution, but at a much lower price.
2) If an institution is selling a huge block of stock, the price could decline significantly, even if only to accommodate that sell order, and then bounce right back. A stop-loss order guarantees a loss if the stock goes down to that price, however briefly.
Eventhough an ideal system fully reverses its position on a reversing signal, if so inclined, one can minimize slippage using stop-limit orders for fills with both the stop and the limit at the same price, market orders for profit taking and stop-limit orders for a stop-loss.
I request that stop-limit orders be feasible at C2 which currently restricts orders to either stop orders or limit orders, not both.
Pal,
I agree. Stop-Limit orders would be a great addition.
Brian
