Educational Segment. How to Use Stop Losses. It is part of risk management. Look at your position sizing. Do you have too much in one stock because it has done so well. Knowing when to sell is a hard thing. Look at the beta of your portfolio. To exit, you could use a volatility stop (VSTOP – Google it). ‘VSTOP’ is a calculated stop loss point that incorporates the volatility in the stock. Look at moving averages. You might sell if it breaks the 10 day.
Hap (Robert) Sneddon FCSI
Chief Portfolio Manager & Founder, Castlemoore Inc. http://www.castlemoore.com