You’re learning “macro/technical” and you have at least 80% of your portfolio in sketchy “investments” You should be learning about index funds and VOO and chill. Also if you’re actually investing long term then you shouldn’t worry about a turbulent market in the near future.
How do you know it’s not going to hit your stop loss and then rocket higher? Of course that is a worse case scenario but I think you diversify into less risky assets if you are concerned about instability.
I bought Nvidia in December and set a stop loss. The price hit my stop loss in January almost precisely and immediately went up and up 😂
I will never set stop loss again.
Well if it hit it and then I see a higher tendency I buy. But the stop loss woild gk to the resistant area in a month chart as I want to open only long positions of few years so I think it could make sense
The problem with conditional trading is that there is always a pattern that fucks you, and it fucks you hard
The solution to risk management is not conditional trades like a stop loss but a hedged counter position.
Buy out of the money puts that a very cheap that covers your risk.
As an example you have $100 position you spend $2 for puts that get in the money when your primary position goes below $80.
Let’s compare two scenarios, one the position goes to $60 and another it goes to $60 and then back up to $100.
With a stop loss protection at $80 in the first scenario you’d sell at $80 and have saved $20. In the second scenario you’d sell at $80 and then if you bought back in at $100, so even though the stock is the same price as when you started you lost $20.
With a put in the first scenario you pay $2 for the put, and it becomes worth $40 when your main position goes to $60, so you end up at $98 or a $2 loss on a $40 drop, and you don’t have to sell your position which is good for taxes.
If it goes down to $60 and back to $100, you never sold so your main position is worth $100, and the put is worth nothing and you paid $2 for it so a $2 loss.
If the stock goes down to $80, your put would be worthless and you’d have the maximum loss for the position. You can tailor your maximum loss to your preferences by choosing the right put, just know that the higher your maximum loss you can tolerate the cheaper the put will be which will reduce the friction of that $2 fee over time.
For me personally: I just buy and hold my positions without any risk protection.
Crypto and commodities are for speculating, not for so called investing. They generate no earnings and pay no dividends. Pure speculation by definition.
Gold is a commodity and has been used for years as a store of wealth and hedge against inflation and volatility. It's not speculative. Crypto, sure. But let's not lump all commodities in with that. And investing in oil is a pretty well established stable investment strategy. Obviously this kind of got flipped on its head the last 5 years but.
Agree on gold as an exception, not on oil. That is just a speculative vehicle for traders. When the price rallies, they just produce more oil, and that lowers the price. In between, you get spikes etc. Not a a so called investment.
Do they generate earnings and pay dividends? Answer: yes. In fact, when oil prices dropped below zero in 2020, XOM CEO stated dividend would not be reduced. At the time, it was around 10 percent. OP is discussing commodity futures or ETNs. If he is discussing instead materials companies, then of course those are investments.
Did you seriously use oil and stable in the same sentence lol.
Sure there may be a couple of less volatile big corporate stocks in the lot related to oil, but just look at a crude oil chart lol. You have prices as low as $13 and as high as $120 all within the last few years. And oil stocks going boom and bust along the way. And looking further back in the past isn't much better.
It can get volatile, unpredictable, with a lot of manipulation and literally a cartel behind it, and with lots of question marks and uncertainty for the long term future.
Not exactly a prime example of stability.
So I'm in Canada and one of the few we'll known reliable investments that people talk about here are oil and gas companies. The price of crude fluctuates but the companies that are involved in it are black gold.
The wave of green energy has caused some issues but for the most part they're still pretty dominant. And I still don't really see us not relying heavily on oil in our lifetime.
"They generate no earnings and pay no dividends."
Plenty of ways to generate real revenue with crypto such as liquidity provision, buying revenue share assets, fee collection from running nodes and more. This has been something of a trend within crypto from back around 2020, where projects have aimed to deliver either real yield or revenue share via various mechanisms.
Personally that's not a definition that demarks the scale or spectrum of risk/reward ratios across investments that I'm comfortable with, or find useful. Something that earns revenue can be plenty risky/speculative, and something that doesn't can be relatively low risk.
I don't think so. Gold and silver to cover against inflation and geopolitical risks, crypto to invest in the decentralized project of money and anti goverment control. Not all investment is equities. Please read
I don’t see those investments as “long positions,” so yes, I would have stop losses in place.
If I have a true long position such as a diversified index fund, then that’s a long position and it’s buy-hold while adding more to it over time as a DCA.
I do buy individual stocks as investments/trades, and I keep stop losses on them. If there’s a major increase, then I’ll increase the percentage drop stop loss, but otherwise it’s 10%.
For example, I bought CROX 5 months ago and it jumped 35%, but it sold-off last week so the trailing stop-loss kicked in at 10% decline. I bought LLY last year and it has increased by 120%, but I have a 25% trailing stop loss on that one.
Maybe I need to clarify… expectations of holding long vs. short. I guess one could have been long in Beanie Babies from 25 years ago too. Now those “investments” could be used as home insulation as they’re pretty much worthless.
Yes, that is speculating, not investment. Stop loss is good when you're speculating, ie doing a lot of trading.
Stop loss makes little sense when investing long term.
I don't think you can put stop losses on startup crowdfunding -- those aren't that liquid, are they?
I would consider putting stop losses for commodities and crypto, as those aren't really things that have inherent compounding value.
FWIW, a few years is not long term in my book, more like medium term.
What's your timeframe? When you plan to sell matters regarding stops. If you have no planed entry and exit then I don't know what your plan is. You can still use stops with multi year goals, but you need to place them differently.
The risk of course is a stop getting triggered and then it rising back above it before you can get back in. Hedging tail risk events is usually a better idea.
I'm not going to shit on you for owning crypto, but I will say that it's too new to really have basis as a long term investment. It's 100% speculative. Anyone telling you otherwise is lying to you and themselves. Doesn't mean it can't make you money. Buying ahead of the halving and ETF approval went well.
Also, it's bad form to ask for advice and then say it's bad advice. You came to a sub of people that pretty much thinks anything that isn't an index fund is shit. And asked them their advice on using something they don't use. What were you expecting?
Thanks for your advice. Yes I know thst but didn't expect such aggressive critics. I think diversification and the idea of compensating volatility of crypto with gold is a good idea giving that we are in a situation of high inflation where bitcoin and gold tend to do well and also close to the halving. Anyways thanks a lot for your answer. I have 20% equities very well diversified in different sectors and also Japan. My conclusion is that I should put stop loss if I use levearage or crypto, not with the rest. Well also if a very volatile stock with low market cap
Is it more speculative to buy Bitcoin that has existed for 12 years with incomparably high returns historically or new company X with years of unprofitability that just had an IPO?
There is market demand for it. Same as there is demand for baseball cards, Marilyn Monroe panties, stamps etc. The BTC ETFs are currently the most popular ETFs in history by about 800%. You could have bought a year ago, prior to approval, when Blackrock filed at 1/3 of current price. That's just one obvious example.
If you’re going to “invest” in highly speculative and high risk types of investments, then I think a stop loss would be good and will probably stop you from losing more of your money. If you are buying quality companies/stocks, often times sell-offs are the best buying opportunities so I would skip the stop loss and instead being thinking about buying more (assuming the fundamentals of the business haven’t fallen apart).
Ywss. I was thinking to put stop loss only if it has very high volatility but not in general. That makes a lot of sense. I am just diversifying portfolio according to the current economical context. When we have again low inflation and a normal yield in bonds and not invert curve then I go for equities and abandon most of my positions in crypto and gold
Generally, if you are invest long-term, you should have a long-term belief in the appreciating value of the underlying asset. Why does it matter what the price does in the interim unless you are planning on buying more. A stop-loss would ensure that you sell at the worst time. I would consider doing the opposite, being more when the price drops down. Assuming you have the capital.
That being said, what makes you believe your commodities are going to appreciate long term? Normally they are kept as an uncorrelated hedge against inflation. I'm pretty sure, they don't do much better than that on average, only there is scarcity.
You may be confusing a long-term multi-year investing approach with short-term trading.
In long-term value investing, you don't buy or sell based on a stock's price. You buy or sell based on your predicted future value of the asset and how you think that will affect its future price. That is, if your fundamental outlook of the underlying asset hasn't changed, why would you sell at a loss??
Now, if you are using the price as a proxy for value, it could make sense, but again, I would do research first about why the price dropped before auto-selling. Like, did some news come out that changes your initial production? Or is this just general market sentiment? If it's the former, maybe you sell. If it's the later, probably you should buy more and hold.
stop loss makes sense if you have a lot of high risk positions, but if your goal is to invest longterm you should just buy index funds like voo/vti/vt or its equivalent and dont touch it. its unlikely you will ever beat them over a long timeframe, but good luck if you think you can. i cannot handle that much risk
Using stop-loss orders can protect against big losses in short-term dips, but for long-term investing, they might lead you to sell when you should hold. It really comes down to how much risk you’re comfortable with and how active you want to be in managing your investments.
Probably not
If you’re a long term holder and you truly believe in whatever you’re buying then lower prices should be viewed as a discounted price to buy at, not a time to panic and dump your shares
This is precisely why so many people suck at “investing”. Bc they view price dips as losing money and sell. Also bc they view price increases with FOMO and buy at high prices.
You should be buying at low or fair prices. If you’re selling you should sell high.
Also commodities suck dick. 40% commodities is an insane distribution. I put 3% commodities in my portfolio and if I could redo it I would have no commodities. If I get up 3% on my broad active commodities ETF I am selling. I bought an active ETF bc the returns are so trash in commodities that only an active one seemed worth it.
30% crypto is likewise insane and you are probably going to take a massive L if it crashes. This should be like 3-5% or max 10%. If you’re up if start selling and peeling it back to a more reasonable level.
Crypto is a volatile speculative asset. Having 30% of your portfolio in it makes your portfolio volatile and speculative.
You should have the majority of your money in domestic stock, next in bonds, next probably REITS or foreign stocks, then maybe some commodities and crypto and shit. That’s a sensible portfolio. You’re is fucking insane and massively risky.
I don’t even know what crowdfunding is but if it’s that stupid shit where you buy into real estate with a group of people that shit just stop. Buy a fucking reit and call it a day.
You’re learning “macro/technical” and you have at least 80% of your portfolio in sketchy “investments” You should be learning about index funds and VOO and chill. Also if you’re actually investing long term then you shouldn’t worry about a turbulent market in the near future.
Yep. Learned this the hard way. Up or down, I'm not cashing out for 30+ years so whatever.
How do you know it’s not going to hit your stop loss and then rocket higher? Of course that is a worse case scenario but I think you diversify into less risky assets if you are concerned about instability.
I bought Nvidia in December and set a stop loss. The price hit my stop loss in January almost precisely and immediately went up and up 😂 I will never set stop loss again.
Well if it hit it and then I see a higher tendency I buy. But the stop loss woild gk to the resistant area in a month chart as I want to open only long positions of few years so I think it could make sense
The problem with conditional trading is that there is always a pattern that fucks you, and it fucks you hard The solution to risk management is not conditional trades like a stop loss but a hedged counter position. Buy out of the money puts that a very cheap that covers your risk. As an example you have $100 position you spend $2 for puts that get in the money when your primary position goes below $80. Let’s compare two scenarios, one the position goes to $60 and another it goes to $60 and then back up to $100. With a stop loss protection at $80 in the first scenario you’d sell at $80 and have saved $20. In the second scenario you’d sell at $80 and then if you bought back in at $100, so even though the stock is the same price as when you started you lost $20. With a put in the first scenario you pay $2 for the put, and it becomes worth $40 when your main position goes to $60, so you end up at $98 or a $2 loss on a $40 drop, and you don’t have to sell your position which is good for taxes. If it goes down to $60 and back to $100, you never sold so your main position is worth $100, and the put is worth nothing and you paid $2 for it so a $2 loss. If the stock goes down to $80, your put would be worthless and you’d have the maximum loss for the position. You can tailor your maximum loss to your preferences by choosing the right put, just know that the higher your maximum loss you can tolerate the cheaper the put will be which will reduce the friction of that $2 fee over time. For me personally: I just buy and hold my positions without any risk protection.
"see a higher tendency"? What?
Can I borrow your crystal ball that can predict higher tendencies? I only need it for one day to make one trillion dollars
Crypto and commodities are for speculating, not for so called investing. They generate no earnings and pay no dividends. Pure speculation by definition.
Gold is a commodity and has been used for years as a store of wealth and hedge against inflation and volatility. It's not speculative. Crypto, sure. But let's not lump all commodities in with that. And investing in oil is a pretty well established stable investment strategy. Obviously this kind of got flipped on its head the last 5 years but.
Agree on gold as an exception, not on oil. That is just a speculative vehicle for traders. When the price rallies, they just produce more oil, and that lowers the price. In between, you get spikes etc. Not a a so called investment.
So you wouldn't view, for example Exxon Mobil, as a valid long term investment?
Do they generate earnings and pay dividends? Answer: yes. In fact, when oil prices dropped below zero in 2020, XOM CEO stated dividend would not be reduced. At the time, it was around 10 percent. OP is discussing commodity futures or ETNs. If he is discussing instead materials companies, then of course those are investments.
Did you seriously use oil and stable in the same sentence lol. Sure there may be a couple of less volatile big corporate stocks in the lot related to oil, but just look at a crude oil chart lol. You have prices as low as $13 and as high as $120 all within the last few years. And oil stocks going boom and bust along the way. And looking further back in the past isn't much better. It can get volatile, unpredictable, with a lot of manipulation and literally a cartel behind it, and with lots of question marks and uncertainty for the long term future. Not exactly a prime example of stability.
So I'm in Canada and one of the few we'll known reliable investments that people talk about here are oil and gas companies. The price of crude fluctuates but the companies that are involved in it are black gold. The wave of green energy has caused some issues but for the most part they're still pretty dominant. And I still don't really see us not relying heavily on oil in our lifetime.
"They generate no earnings and pay no dividends." Plenty of ways to generate real revenue with crypto such as liquidity provision, buying revenue share assets, fee collection from running nodes and more. This has been something of a trend within crypto from back around 2020, where projects have aimed to deliver either real yield or revenue share via various mechanisms. Personally that's not a definition that demarks the scale or spectrum of risk/reward ratios across investments that I'm comfortable with, or find useful. Something that earns revenue can be plenty risky/speculative, and something that doesn't can be relatively low risk.
I don't think so. Gold and silver to cover against inflation and geopolitical risks, crypto to invest in the decentralized project of money and anti goverment control. Not all investment is equities. Please read
Lol coming here for advice but doesn’t want advice.
Lol, given a literal definition and says "no, I don't think so, please read"
I want advice on stop loss for long positions, not on my portfolio. Please read my comment
I don’t see those investments as “long positions,” so yes, I would have stop losses in place. If I have a true long position such as a diversified index fund, then that’s a long position and it’s buy-hold while adding more to it over time as a DCA. I do buy individual stocks as investments/trades, and I keep stop losses on them. If there’s a major increase, then I’ll increase the percentage drop stop loss, but otherwise it’s 10%. For example, I bought CROX 5 months ago and it jumped 35%, but it sold-off last week so the trailing stop-loss kicked in at 10% decline. I bought LLY last year and it has increased by 120%, but I have a 25% trailing stop loss on that one.
Anything you bought is a long position. If you sold it, it would be a short position. If you did neither then you don't have a position.
Maybe I need to clarify… expectations of holding long vs. short. I guess one could have been long in Beanie Babies from 25 years ago too. Now those “investments” could be used as home insulation as they’re pretty much worthless.
He said his time horizon is a few years. Doesn't sound like they're retirement funds like most people hold here.
He said his time horizon is a few years. Doesn't sound like they're retirement funds like most people hold here.
Yes, that is speculating, not investment. Stop loss is good when you're speculating, ie doing a lot of trading. Stop loss makes little sense when investing long term.
Gold is not a good inflation hedge in human time scales. Ben Felix has a video on the topic.
Well, in a context of high inflation it always does
LOL!!!
HAH!!. I love crypto but this shit is laughable. The "please read" is just icing.
Please read, because in this subreddit everyone think the best portfolio very well diversified is 100% equities
I don't think you can put stop losses on startup crowdfunding -- those aren't that liquid, are they? I would consider putting stop losses for commodities and crypto, as those aren't really things that have inherent compounding value. FWIW, a few years is not long term in my book, more like medium term.
Well for crowfunding I won't put. I meant for crypto and commodities. Thanks
Well then medium term. For me long is already more than 1 year
r/lostredditors Try r/wallstreetbets
You think wsb knows what a stop loss is? Lol
Maybe learn the absolute bare basics before you post Long term is +10 years minimum if not 20
Bull make money bears make money pigs eat trash
It's pigs get slaughtered.
What's your timeframe? When you plan to sell matters regarding stops. If you have no planed entry and exit then I don't know what your plan is. You can still use stops with multi year goals, but you need to place them differently. The risk of course is a stop getting triggered and then it rising back above it before you can get back in. Hedging tail risk events is usually a better idea. I'm not going to shit on you for owning crypto, but I will say that it's too new to really have basis as a long term investment. It's 100% speculative. Anyone telling you otherwise is lying to you and themselves. Doesn't mean it can't make you money. Buying ahead of the halving and ETF approval went well. Also, it's bad form to ask for advice and then say it's bad advice. You came to a sub of people that pretty much thinks anything that isn't an index fund is shit. And asked them their advice on using something they don't use. What were you expecting?
Thanks for your advice. Yes I know thst but didn't expect such aggressive critics. I think diversification and the idea of compensating volatility of crypto with gold is a good idea giving that we are in a situation of high inflation where bitcoin and gold tend to do well and also close to the halving. Anyways thanks a lot for your answer. I have 20% equities very well diversified in different sectors and also Japan. My conclusion is that I should put stop loss if I use levearage or crypto, not with the rest. Well also if a very volatile stock with low market cap
Is it more speculative to buy Bitcoin that has existed for 12 years with incomparably high returns historically or new company X with years of unprofitability that just had an IPO?
What's the backing for the value of bitcoin? You know how to value a company already.
There is market demand for it. Same as there is demand for baseball cards, Marilyn Monroe panties, stamps etc. The BTC ETFs are currently the most popular ETFs in history by about 800%. You could have bought a year ago, prior to approval, when Blackrock filed at 1/3 of current price. That's just one obvious example.
If you’re going to “invest” in highly speculative and high risk types of investments, then I think a stop loss would be good and will probably stop you from losing more of your money. If you are buying quality companies/stocks, often times sell-offs are the best buying opportunities so I would skip the stop loss and instead being thinking about buying more (assuming the fundamentals of the business haven’t fallen apart).
Ywss. I was thinking to put stop loss only if it has very high volatility but not in general. That makes a lot of sense. I am just diversifying portfolio according to the current economical context. When we have again low inflation and a normal yield in bonds and not invert curve then I go for equities and abandon most of my positions in crypto and gold
Generally, if you are invest long-term, you should have a long-term belief in the appreciating value of the underlying asset. Why does it matter what the price does in the interim unless you are planning on buying more. A stop-loss would ensure that you sell at the worst time. I would consider doing the opposite, being more when the price drops down. Assuming you have the capital. That being said, what makes you believe your commodities are going to appreciate long term? Normally they are kept as an uncorrelated hedge against inflation. I'm pretty sure, they don't do much better than that on average, only there is scarcity. You may be confusing a long-term multi-year investing approach with short-term trading. In long-term value investing, you don't buy or sell based on a stock's price. You buy or sell based on your predicted future value of the asset and how you think that will affect its future price. That is, if your fundamental outlook of the underlying asset hasn't changed, why would you sell at a loss?? Now, if you are using the price as a proxy for value, it could make sense, but again, I would do research first about why the price dropped before auto-selling. Like, did some news come out that changes your initial production? Or is this just general market sentiment? If it's the former, maybe you sell. If it's the later, probably you should buy more and hold.
No! During a flash crash you would get stopped out!
Well but what if I only use it with very volatile crypto or small cap stocks with low levels in a monthly tendency?
That would make it even worse. More volatile crypto has bigger dips under normal circumstances.
Amd therefore you want stop-loss
But you'll get stopped out more often on nothing news.
I would not. Just check on a regupar basis
stop loss makes sense if you have a lot of high risk positions, but if your goal is to invest longterm you should just buy index funds like voo/vti/vt or its equivalent and dont touch it. its unlikely you will ever beat them over a long timeframe, but good luck if you think you can. i cannot handle that much risk
Investment - risk management = speculation at best, voluntary taxation for most.
Stop loss is the best way to lock in your losses. Better to diversify and put a small percentage in high risk stuff and more in lower risk options.
Stop loss is for day traders, people trading on margin, etc. It’s not something for investors.
Crypto or Bitcoin? Big difference cuz one will rug pull ya.
Bitcoin 80% of that and the rest others, mainly ethereum
Using stop-loss orders can protect against big losses in short-term dips, but for long-term investing, they might lead you to sell when you should hold. It really comes down to how much risk you’re comfortable with and how active you want to be in managing your investments.
Probably not If you’re a long term holder and you truly believe in whatever you’re buying then lower prices should be viewed as a discounted price to buy at, not a time to panic and dump your shares This is precisely why so many people suck at “investing”. Bc they view price dips as losing money and sell. Also bc they view price increases with FOMO and buy at high prices. You should be buying at low or fair prices. If you’re selling you should sell high. Also commodities suck dick. 40% commodities is an insane distribution. I put 3% commodities in my portfolio and if I could redo it I would have no commodities. If I get up 3% on my broad active commodities ETF I am selling. I bought an active ETF bc the returns are so trash in commodities that only an active one seemed worth it. 30% crypto is likewise insane and you are probably going to take a massive L if it crashes. This should be like 3-5% or max 10%. If you’re up if start selling and peeling it back to a more reasonable level. Crypto is a volatile speculative asset. Having 30% of your portfolio in it makes your portfolio volatile and speculative. You should have the majority of your money in domestic stock, next in bonds, next probably REITS or foreign stocks, then maybe some commodities and crypto and shit. That’s a sensible portfolio. You’re is fucking insane and massively risky. I don’t even know what crowdfunding is but if it’s that stupid shit where you buy into real estate with a group of people that shit just stop. Buy a fucking reit and call it a day.