Rig, it doesn't work that way. For every sale of a share there has to be a buyer = liquidity. If there are "no buyers" of shares there can be no sellers = share price doesn't move (btw this is a bad situation also).ETFs seems like a new concern that the market does not account for. Trillions tied up in them. They may be overvalued and could tumble so fast any stop loss will not kick in as there will be no buyers.
Nobody goes to 100% cash but may increase their %age cash position from say 10-20% to 30-40% in order to de-risk and/or buy shares in the event of a market downturn if they feel a correction is imminent.But, if you go to cash and wait then meanwhile the market goes up 30% before correcting 20% you have lost 10%.
OK. But WTF happens with a stop loss if there is a sudden crash like the market loses a huge percentage in one day or even a few hours ? Will your order always get filled if your stock falls?Rig, it doesn't work that way. For every sale of a share there has to be a buyer = liquidity. If there are "no buyers" of shares there can be no sellers = share price doesn't move (btw this is a bad situation also).
S/L's are explained here: http://www.investopedia.com/ask/answers/04/022704.asp Note that there are scenarios where your S/L will not fire, such as when a stock opens below the S/L due to a sudden drop (bad news, earnings miss, etc.) after/pre market trading hours.
Nobody goes to 100% cash but may increase their %age cash position from say 10-20% to 30-40% in order to de-risk and/or buy shares in the event of a market downturn if they feel a correction is imminent.
G/L
That is my point with ETFs. There is no guarantee their price matches their intrinsic value and during a sudden crash it seems to me you could lose huge as the ETF crashes below intrinsic values.I'm not an expert...but my understanding is this....
With a Stop Loss order in the scenario you represented your shares would be sold at $2.
With a Stop limit order your shares would not be sold(assuming you put the limit at lets say $9.50).
In my opinion the bigger issue with ETF's is flash crashes. Where the ETF value diverges from what the underlying stock value. The ETF price can drop and come back up in less than a second, and your stop loss or Stop limit could sell your shares and you'd be like....wtf? why?
Just as I suspected. You got to know WTF you are doing to mess with a stop loss and I do not know WTF I am doing.@Rig @wbh32 If you read the link in my prior post and the one here you will have a much better idea of the process. To make a very long story short S/L's can be technically very complicated, have their place in active trading, but can provide equal measures of "safety" and risk especially when used incorrectly. I use them sparingly and review them regularly (IE daily).
https://www.theglobeandmail.com/glo...rder-is-a-double-edged-sword/article17513501/
If you prefer ETF's/Index Funds this guy is local and has a solid take on the space. G/L
http://canadiancouchpotato.com/