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Here’s Why Traders Need to Pause Their Stops

This is a syndicated repost courtesy of Slope of Hope. To view original, click here. Reposted with permission.

I am mightily irked at myself right now, but I’ll make this into a teachable moment.

Liquidity moves markets!

Follow the money. Find the profits! 

I short stocks (as most of you know), and I keep a lovingly-maintained stop-loss order on every single one of them, without fail. Before the market opens each morning, I pause every single one of them, and I wait a minute or two before reactivating those orders. And let me give you a perfect example as to why I do this:

What you see above is the symbol VC this morning. When it opened, it absolutely exploded higher, and within milliseconds, it returned to its original level.

Want to guess who got stopped out on that spike? Me.

Want to know why? Because I didn’t pause my orders like I usually do!

I can offer no good excuse for failing to pause my orders. I was just being distracted and slipshod. And it cost me $700 instantly.

I don’t know where these weird spikes come, and frankly, it doesn’t even matter. The fact is that they do happen, and one should shield themselves from the first few seconds of weirdness and shenanigans that take place at the opening bell. I usually do, and I didn’t, and I’m regretting it.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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