Re: Question for B&M pros
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It's no different than a stop loss that you use on a stock purchase.
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I don't mean to hijack, but it is very different, only because most people don't understand that a stop loss on a stock purchase does not protect you from losses beyond the stop price.
A stop loss order becomes a market sell order once an execution takes place below the stop price. If a stock is gapping down because of bad news, and your stop gets violated, you just sold at a much lower price than the stop. And addtionally, if the stock bounces back quickly, you already sold, and can't get back in where you sold it for.
e.g. XYZ is trading at 23.20 and you have a stop loss GTC (good till canceled) at 22.00 and the stock halts for news (CFO arrested for kiddie porn or Phase III trial canceled), and opens at 18.25, congrats you just sold it @ 18.25 or lower if it continued to move down. Usually by the time you find out from your broker that you sold your stock at 18.25, it is up to 20.00 and you are going WTF?!?!?!?! I had a stop at 22, I sold it for 18, and now its at 20.
Check it out...
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