Placing a stop order on all or most stock

Question

I watch the market everyday pretty closely. So I was wondering if this was a good idea... If I put a stop order on all my stocks about 5 percent under what I paid for them. So if the stock goes below the stop price, I will only lose 5 percent and then buy again when it’s low... or is that a limit order, I'm pretty new at this so I'm not exactly sure. What do you think? or any suggestions because I'm tired of my value going down with the market.

Oh and this is for a simulator so it's not real ... YET!

Answer 1

First, it's always a good idea to have some price in mind that you want to sell at-it's called an exit strategy. So you're on the right track.

Second, once you place the "stop" order, it is possible to be lower than your stop price, it becomes a market order, and you are effectively "next in line" and you get the next price.  One thing to consider is the "big news" event that could mean a big difference in your named price and the actual fill price (the price you sold at). I'll give you an example. Let's say that a stock closes trading, during normal market hours, at $40, and you have a stop in at $35. That evening, there is some catastrophic news and the stock opens normal trading at $30/share. You just sold at $30/share, give or take a few cents. There is no real gaurantee, but your strategy, as presented, is good.

BTW, a limit order to sell is placed at some price above  the current market price. you may be new, but you're on track. In very general terms, here are the basic options as far as order types.

Whatever the current market price of the stock, take that number and consider the following:

Buy limit: price set something below current market

Buy stop: price set something above current market

Sell limit: price set something above current market

Sell stop: price set something below current market

There are also other order types and conditions, but these are the most basic. Hope it helps.  

Answer 2

What happens if you place a stop order, it gets executed, you buy again when it's "low", place another stop order that gets executed, and so on.

Just another way of racking up your losses.

You need a better plan for trading.