If ANYONE knew 2 years ago where LYC SP would be now, then a stop loss would have been advantageous....thou as stated by PROJECT, if you knew it was going down and continue down you'd have got out anyway.
Between then and now the share price hasn't moved in a straight line (and many market makers manipulate the shares to do exactly that, to get you back in, for the next whammy). For the shrewd stopped out investors, who think the company has a great future, they will be inclined to re-invest as the price moves up again. Some set 5-10% of gain before reinvesting, some look for higher highs and higher lows [HHLL] (depends on period of HHLL: hours, days to weeks)...etc...etc. But once back in the stops are set. And the parasites know these levels because they have read the same books, and know your methodology.
The following is based on a visual from the graph..so it can be in error. For the 5%-10% re-investor...From June 2010 to May 2011, you would have been stopped out about 3 times and made about 1/3 the rise (not bad). From May 2011 to now, you would have been stop out about 10 times and visually lost 50% of the fall.
(NOTE: for a 10% stop, the average loss was 13c (20c at $2 and 6c at $0.6) with 10 stops that's about $1.30 or half the fall..so about right. Also note: on any other share the price swings could have meant you lost more then the fall, just depends on the size of the swings).
For the higher highs (over month)....June 2010 to May 2011. About 1/4 of the rise. And May 2011 till now. Stopped about 8 times and lost 60%. (For HHLL over days... to May 2011: about 1/4 and stopped 6 times, from May 2011: 19 stops and lost 80-90%.
But with greed the LTer hopes that tomorrow it will swing up and keep going. Had they had to wait for a 5-10% change or a HHLL, they would have missed out on recouping some of their losses.
So stops would have saved you, but when (and no one knew or knows)it does go will you have time to get in.
It's all a gamble
LYC Price at posting:
56.5¢ Sentiment: None Disclosure: Held
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