written by reader TradeStop’s VQ

By tapaspanda, December 10, 2020

Hi
I am new to the world of investing. I started investing towards the end of June 2020. Since I don’t have the brains and time to do the homework on stocks, I try to look up stock teases recommended by various newsletters. That’s when I came across Stock Gumshoe. I am really glad that I found this site. I researched all the newsletter rankings on this website and finally subscribed to Nate’s Notes. I feel I have been pretty lucky with the stock picks so far. I became a paid member to Stock Gumshoe recently. That’s when I got a glimpse of the Real Money Portfolio. There I saw the stop loss trigger used by Travis. My question: Is it worth paying for the TradeStop’s subscription? Are there other competing services available? I entered NVCR at $58 and got out at $120 when the stock fell from $140 to $120. Now the stock is at $170. I am not sure if TradeStop’s subscription would have helped me in this decision.
Thank you for your advice/guidance in advance.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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Travis Johnson, Stock Gumshoe
December 14, 2020 11:40 am

Stop losses will never be perfect, theirs are essentially based on volatility — there’s no magic, but I find it helpful for setting my expectations… a stock that routinely moves by 40% in a year shouldn’t have a 20% stop loss trigger unless you’re a short-term trader and can’t handle any level of pain, for example.

There are plenty of other rational stop-loss setting products out there, and you can also find your own numbers — using numbers like “rolling volatility” that might be provided by brokerage websites or other free data sources will often give you a similar picture and let you know what kind of movement to allow for within your risk reduction parameters. Thinking about those criteria and how you’ll set stop losses, and whether or not you’ll follow a strict risk-reduction strategy like that at all, is probably more valuable than the specific triggers offered by a paid service… unless you don’t want to be involved in the day-to-day strategy at all or don’t trust yourself to do any dispassionate analysis during a time when the market goes crazy one way or the other (which is a valid concern — it’s hard to do objective analysis when you’re freaking out about stocks spiking or crashing). Whether a few hundred bucks is worthwhile probably depends on how much time you want to spend, and how big your portfolio is.

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