Podcast: Where’s your stop loss?

In JSE Direct, Latest by Simon Brown

Where's your stop loss?

Where’s your stop loss?

Simon Shares

  • Telkom (JSE code: TKG) has confirmed government wants to sell their 39% stake in the company, likely to bail out SAA. Classic rookie error, exiting good trade to keep bad trades.
  • Amazingly good results from Home Choice (JSE code: HIL), but with zero liquidity in the stock the results are merely of passing interest.
  • Decent results form AdaptIT (JSE code: ADI) albeit some margin pressure in the education and financial services segments albeit with the latter doing decent revenue growth. All considered around 900c price is a fair value.
  • I mentioned last week I was digging more into ADvTech* (JSE code: ADH) to determine a price to buy at and have now started buying with my fair value (so price below which I am happy to buy) being 1970c.
  • The Harvey storm has hit land again, this time at Louisiana and this is just next to Lake Charles where Sasol* (JSE code: SOL) is building their Ethan Cracker plant. So far Lake Charles has been spared the worst of the wind and rain but we have a few more days of rain to come. The Sasol project will almost certainly be delayed by some amount (and hence costs) but as yet management have said nothing.
  • Understanding the Krugerrand Custodial Certificate.
  • Up coming events;

I hold ungeared positions.

Where’s your stop loss?

As a trader your stop loss is your most important decision as it protects your capital from destruction. Sure it is hard emotionally cutting losing trades, but that’s a lot harder then going bust – so every good trader is ruthless with their stop losses.

But where to place it is hard.

Point is – don’t be obvious when placing a stop loss. Don’t make it too tight or place it where everybody else would place their stops. Other traders will go stop loss hunting and will shake you out. If you find yourself being stopped out only for the trade to reverse and go in your initial direction – widen your stops. That said careful your stop loss isn’t so wide that your system starts to lose money.

Yes stop losses are hard. Hard emotionally as we’re losing money and even harder to know where to place them. But without a stop loss process as part of every trading system you will go bust. So spend the time working on your stop loss placement within your trading system.

We Get Mail

  • Hawu
    • I kindly would like to know, what is meant by a company when its raising funds on book-build?

JSE – The JSE is a registered trademark of the JSE Limited.

JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

Meet the Just One Lap team at these free live events

Click here to meet the Just One Lap team at one of our live, free events.

Subscribe to Just One Lap