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Poor choice of mutual funds is more forgiving than ignoring sell stops...Anyone employ sell stops?

beebee
edited April 2011 in Fund Discussions
How many investors here employ a "sell stop strategy"?

My understanding of this strategy is that it requires tracking the daily value of your EFTs, mutual funds or stocks. The purchase price and subsequent new highs are continually compared to the daily price. When a new high is made a new reference is established. The sell stop price is usually a percentage below (say 7%) the most recent reference price(your personal high). In this scenario, a 7% price drop from this most recent reference price would flag this investment as a candidate to sell. The strategy is an method of capturing gains as well as a way of limiting losses.

The attached (lengthy...sorry) read explains this strategy in more detail.

Any comments would be appreciated.

http://www.successful-investment.com/SellStopDiscipline.pdf

bee

Comments

  • [Deleted User]
    The user and all related content has been deleted.
  • Michie
    Schwab.com permits its account holders to program in a sell stop for EFTs and stock. I don't think it works for mutual funds. In their research section for the specific EFT of interest, they usually post a recommended sell stop figure that I may use or I may figure my own sell stop. And sometimes, I have benefited by the sell stop and sometimes I haven't! But it does give me peace of mind especially for those periods of time when I am "computered out" or on vacation and don't wish to connect by phone or computer. I think I recall Rono posting that he finds sell stops helpful --- but I could be mistaken. Thank you for PDF reference --- I'll read it soon.
  • Old_JoeOld_Joe
    Hi Michie- put me down with Maurice... wound up selling things I should have kept, and vice-versa. Really hard to know with my genuine WalMart crystal ball.

    OJ
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