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Example of Buy and sell Stop for first entry and add on.

QuestionsCategory: QuestionsExample of Buy and sell Stop for first entry and add on.
Marco Cotugno asked 7 months ago
Good evening Pat. First i hope you are having a great Sunday. So as you may know by now i’m totally new to this world and I’m still trying to catch some basic concepts. During last couple of weeks i have focus on how i can get a good buy and sell tactic. I have browsed old questions (and your answers) about buy stop orders and i think i have caught the concept: Place buy stop order and at the same time place a sell stop order. So just to make sure i got it correctly let me make an example: Let’s take one stock of your last key list e.g. PDD. You advised as an entry point 150.40 $. Let’s assume it has a clean and simple base. I can place a buy stop order at 150.40 $ and at the same time place a sell stop order at 145.88 (considering my loss limit at 3%). I can then monitor the market and decide to remove the order if the market is not good or if i notice that it is about to break out but with no volume. Is that correct? When would you advise to move the stop order at break even? At the end of the day? or would you wait for some specific conditions? My second question is: if you add to this at a higher price would you also move the sell stop order, let’s say 3% below the last entry? or would you keep two different stop orders? So if you bought 50 shares as a first order and 20 shares as an add on would you keep a stop sell for 50 shares untouched and add a sell stop order for 20 shares at 3% below your add on entry? And my last question is: I know you are using IBKR. After I 've placed my first sell stop order i received from them an email saying: “Please note that a Stop Order is not guaranteed a specific trade price and may trade significantly away from its stop price, especially in volatile and/or illiquid markets….If triggered during a sharp price decline, a Sell Stop Order also is more likely to result in a trade well below the stop price…..In accordance with our obligations as a broker, large Stop (Market) Orders may be split into smaller orders, which will be traded over time. This is designed to reduce the impact of these large orders on the market, including the impact your order has on the market price.” I do not reckon mine could be considered as “large orders” but is it something to keep in consideration? Placing buy or sell stop order might be risky because you can buy at a much higher price or sell at a much lower price? Please forgive me if i made too many questions. I have tried to answer myself looking at other users questions and it definitely helped me to clarify many concepts but i still had some doubts and that’s why the long post. Thank you for your help and i wish you and all the team a great and profitable year!
1 Answers
Avatar photoOwen Staff answered 6 months ago
Hi Marco, Pat made this video for you... https://youtu.be/l0ebKKiCFoA
Marco Cotugno replied 6 months ago

Thank you guys! Thank you Pat! Your videos always help me a lot… and no they’re not too long! i treasure every single second of it! Thank you!