From Ken Little
you are planning a summer vacation, don’t forget to arrange to take care of your stock positions along with the dog, the plants and your mail.
You don’t want to leave any of those unattended for any length of time.
Technology permits you to take stock monitoring with you virtually (pun intended) where ever you go. However, this is a vacation and you may not want to spend it watching the Dow.
Some protection What you need is some protection in place to prevent significant losses if your stocks melt down while you’re relaxing on a beach somewhere. You may also want to jump on a stock that you’ve had your eye on, but felt was currently over-priced.
You can solve both these problems with a couple of standing orders with your broker.
A stop loss order tells your broker that if the stock’s price slips to this level, you want to sell.
You don’t want to leave any of those unattended for any length of time.
Technology permits you to take stock monitoring with you virtually (pun intended) where ever you go. However, this is a vacation and you may not want to spend it watching the Dow.
Some protection What you need is some protection in place to prevent significant losses if your stocks melt down while you’re relaxing on a beach somewhere. You may also want to jump on a stock that you’ve had your eye on, but felt was currently over-priced.
You can solve both these problems with a couple of standing orders with your broker.
A stop loss order tells your broker that if the stock’s price slips to this level, you want to sell.
This prevents you from suffering a significant loss and is executed without any further action on your part.
You’ll want to set the stop loss price below the current trading range of the stock so normal price fluctuation doesn’t activate it. For some stocks, five percent below the current market price is just fine, while stocks that are more volatile may need a bigger cushion.
If you have a nice profit in a stock that is still rising, you probably want to use a variation of the stop loss called a trailing stop. Read my article on trailing stops for more information on this easy tool.
Long-Term Hold If you have a stock that you feel is a hold for the long term, you may be willing to let it slip farther.
If there is a stock you want to buy, but are looking for a better price you can leave a limit order with your broker. A limit order specifies the number of shares and price you are willing to pay for the stock.
If the stock hits that price or lower, your broker will execute the order.
Of course, there is a small danger with limit orders. What if the stock you had your eye on suddenly turns to dust because of some corporate scandal? Your limit order would be executed as the stock plunged into the toilet. It doesn’t happen that often, but it could, so be aware of the risk.
Conclusion You don’t have to leave your stocks unattended when you go on vacation. Use some of the available stock orders to help protect your portfolio and plenty of sun block to protect your skin and you’ll enjoy the vacation even more.
You’ll want to set the stop loss price below the current trading range of the stock so normal price fluctuation doesn’t activate it. For some stocks, five percent below the current market price is just fine, while stocks that are more volatile may need a bigger cushion.
If you have a nice profit in a stock that is still rising, you probably want to use a variation of the stop loss called a trailing stop. Read my article on trailing stops for more information on this easy tool.
Long-Term Hold If you have a stock that you feel is a hold for the long term, you may be willing to let it slip farther.
If there is a stock you want to buy, but are looking for a better price you can leave a limit order with your broker. A limit order specifies the number of shares and price you are willing to pay for the stock.
If the stock hits that price or lower, your broker will execute the order.
Of course, there is a small danger with limit orders. What if the stock you had your eye on suddenly turns to dust because of some corporate scandal? Your limit order would be executed as the stock plunged into the toilet. It doesn’t happen that often, but it could, so be aware of the risk.
Conclusion You don’t have to leave your stocks unattended when you go on vacation. Use some of the available stock orders to help protect your portfolio and plenty of sun block to protect your skin and you’ll enjoy the vacation even more.
Article Resource : http://stocks.about.com/od/tradingbasics/a/Vac051005.htm
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