Freehold - re:......."a rush of stops losses will then be triggered" above.....
It always strikes me as slightly perverse that so many PIs manage their PFs with stop losses in place.
There is a long history of Market Makers, Brokers and Nomads (Nominated Advisors) - the "barrow boys"- manipulating the market to trigger stop losses.
This is particularly easy in small caps where a significant proportion of holders are PI's who are NOT sitting "on the button" throughout the trading day or operating algorithms for mega-million trades.
These "barrow boys" need to accumulate shares at the right time - before a major uplift - to trade on into the rising market.
The traditional method is to short the market with borrowed shares and trigger stop losses.
PI's render themselves totally helpless in such a situation -
and offer up their capital for depletion at somebody else's behest..........
I regularly look at the "on loan" and "borrowed" figures just to remind myself of the poker game all us PIs' are engaged in ......
In the "good old days" Mr Market determined the "value" of a company. PI's and institutions invested for the long term [generally] and brokers/market makers made a steady living up and down the furrow.
Now with algorithms, bots and shares on loan in play, the value of a stock can be turned on it's head and massive transfers of shares - from the weak to the strong - can take place in seconds.
Any day of the week the "barrow-boys" can bulldoze up loads of stop losses on small caps and snaffle the shares.......
Then they turn the market in the opposite direction and off they go with your shares.......
Needless to say I have never used stop losses on my small caps .........
It just seems to me that you are placing 50% of all your trading decisions [the strategic decision to sell] into someone else's hands
There are some good reasons for using "stop losses" on your very largest holdings and largest capital commitments
Say on Blue Chips when coming up to retirement [see ref BP below]....
For me stop losses are not for me in small caps however large my position.
Due to their inherent volatility how many small caps are prone to a dead cat bounce in hours if not in days.......
http://www.theinvestorspodcast.com/...sion/3436/do-you-believe-in-using-stop-losses
Alternatively ........
http://www.tradingacademy.com/resources/financial-education-center/are-stop-loss-orders-useless.aspx
Would Warren Buffett let one business in his vast holdings of companies cause the demise of Berkshire Hathaway. Why would a trader allow any one loss ruin their day, week, month or year?
Well Yes !!.....
Warren Buffett admits 'thumb-sucking' over Tesco cost him $444m
http://www.theguardian.com/business...admits-thumb-sucking-over-tesco-cost-him-444m
POK Shares Borrowed and On-Loan - 03 Sept 2015
ASX - Securities lending disclosure http://www.asx.com.au/services/information-services/securities-lending-disclosure.htm
The Daily Market Report disclosure regime consists of both 'gross transactional flow' and 'outstanding loan positions' in each ASX-listed security. Complementing the data is comparative settlement data and additional settlement performance data.
POK - Shares on Loan - 03 Sept 2015........
http://www.asx.com.au/data/securities_lending_outstanding_loaned.xls
POK - Shares Borrowed - 08 Sept 2015........
http://www.asx.com.au/data/securities_lending_outstanding_borrowed.xls
GL- Oilf.
