Stop Loss
Today was a perfect illustration of the folly of ignoring stop losses - however perverse I thought the movement I should have just covered the loss and lost a couple of hundred, whereas now as it stands I would lose £500 and possibly more wiping out any gains made this week. Part of this was also to do with mis-reading the previous day share value - the close price was a spike and most of the prices were lower and by the time I joined the market on Thursday the price I required had already been passed - and so then should I.
One learning point is in future when assessing shares for buying I should check their overall value over the previous day not solely their end of day price. And then base my requirement on that and thus the following trading day I should only buy if the share is trading to a similar level of the previous day. Kind of obvious really.
As for the issue of stop-loss I need to give this further thought - luckily I am only paper-trading so I can learn from this experience without having taken a real loss. I do though at some point need to make a decision about stop-losses - whether I will utilise them or not. Because if I do then today it would have been triggered and I would have taken a manageable loss.
Issue too about price recovery levels - it matters not whether price likely to recover rather it needs to recover within 1 trading day - if I think that is unlikely then I need to exit stage left, including above my stop loss if need be.
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