Stopped Out

Anyone who has ever talked "trading" with me knows that I place tight trailing stop orders on the stocks that I buy. As a result of this practice, I was stopped out of both Goldman Sachs and EWZ (Brazil Exchange Traded Fund) today. Because the stops are trailing, my loss on GS was limited to $.50 per share and a little less than $1.00 on EWZ. Losses, yes, but at least the downside was predefined and limited.

In addition to trailing stop losses, I also add adjustable stops to most orders. In other words, once a stock hits a particular trigger, the trailing stop order is adjusted. Normally, I simply adjust the stop trigger. As an example, say that I buy a stock for $100 per share. I will place a trailing stop order at $5, which automatically sells the stock when it hits $95. If the stock trades at $110, then the stop price is adjusted to $105 automatically. That's the trailing feature. If, however, the stock hits $115, then the stop is adjusted to $1 (stop loss, i.e. sell, if the stock moves down to $114), allowing me to lock in higher profits.

These protectionist measures can be frustrating on days like today, when I have no short positions and it seems like I am losing money with potential upside, but at the end of the day, I am always thankful for the certainty of knowing what losses I might suffer.

The weekend was fantastic. Celebrated Mason's 1st birthday and spent some time with Maya, my favorite Miniature Pincher. Today I drove a friend to the Tampa Airport with a slight detour to Rockaway Frenchy's on the beach. It was an absolutely perfect day. Ate Grouper, watched waves break on the pure white sand, and enjoyed looking at beautiful women.