huge sellers on market - why?, page-10

Ben,

Very simple, setting a tight stoploss allows you to preserve your capital and live to fight another day. It may not always work but it may also then save you from an impending disaster.

No-one is perfect and everyone gets it wrong but I'll give you a recent example of mine with NCM which has followed a similar path to NWH. I love buying "blue chips" who get smashed on a particular day as more often than not they bounce back in time. A few weeks ago I bought NCM on the day they got hammerred 20% from around $24 to $20 after missing production targets. My buy-in price was around $20.25, the fundamentals at that stage were still "good" apparantly (not too disimilar to NWH now I reckon). It stayed there for a day or so but within 3 days it had continued it's reverse so I decided to exit at $18.80 from memory. Based on your theory, I watched the SP continue to go down and because it was "cheap" and the fundamentals were still "good or very good", I re-entered a couple weeks ago at $15.90 as that was way "cheaper" than my original price of $20.25 so it must be a goer right because nothings changed with the company one would think? Wrong! SP continued to head South over the coming days. I was then stopped out at my 10% limit which was around $14.50 as I had noticed that everytime it was up a bit, massive sellers would come in for it and sell it down. This to me tells me usually someone is "in the know" and is trying to get out asap. Luckily for me after getting stopped out, about 2 days later they come out with another Announcement about missing profit targets earlier this month and the SP is now $9.30. Sure it cost me in total about 15-20% both times, but I'd rather that then pouring hard earned dollars into a "good stock" that has gone down from $20.25/$15.90 to $9.30!

Moral of the story, do not keep stop losses at your own peril!!! I too used to have the same philosophy as you and it cost me literally tens of thousands of dollars before I learnt my lesson. Thankfully now I made all the money back on property development but that's another story lol. Learn from my and your mistakes folks :)

Good Luck All