• Print
  • Default text size A
  • Larger text size A
  • Largest text size A

The stop trap

  • By Active Trader Staff,
  • Active Trader Magazine
  • Trends
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.

It’s happened to everyone. You put on a long trade and place a stop-loss order to protect your position. The market is initially moving in your favor, and you move on to other business. When you go back to check your trade a little later, the trade is turning against you. You watch the market approach your stop price, and you fight the urge to cancel your order. Then the market makes a sudden drop — precisely to your stop, taking you out of the market — and then just as suddenly jumps back to the upside. And it keeps going up. You would have a nice profit in hand if you were still in the market, but here you are, on the sidelines, sitting with a loss and wondering what happened. They got you again. Those sharks, those slimy insider market makers, specialists, brokers — whatever — who share information and pick off regular traders like you. No, they didn’t. Not really. Well, maybe they did. But it’s not what you think. One of three quite mundane things probably happened. Read on to learn why this happens and how to potentially decrease the likelihood of it happening again.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
1. Active Trader Services are available to investors in households that place 120 or more stock, bond, or options trades in a rolling twelve-month period and maintain $25K in assets across their eligible Fidelity brokerage accounts.
Article copyright 2011 by Active Trader Magazine. Reprinted from the April 2010 issue with permission from Active Trader Magazine.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
601825.2.0