{"id":107833,"date":"2017-06-22T10:30:19","date_gmt":"2017-06-22T14:30:19","guid":{"rendered":"http:\/\/countingpips.com\/?p=107833"},"modified":"2017-06-22T06:31:58","modified_gmt":"2017-06-22T10:31:58","slug":"newtons-curse-puts-investors-at-risk","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/newtons-curse-puts-investors-at-risk\/","title":{"rendered":"Newton\u2019s Curse Puts Investors at Risk"},"content":{"rendered":"<div id=\"inves-3350672625\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">June 22, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_newton_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_newton_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/06\/0617_newton_feature-300x155.jpg 300w\" alt=\"Newton's Curse Puts Investors at Risk\" width=\"580\" height=\"300\" \/><\/p>\n<ul>\n<li>The market\u2019s best-performing asset class.<\/li>\n<li>When the law of gravity hits the market.<\/li>\n<li>The easiest way to survive a stock meltdown.<\/li>\n<li><strong><a href=\"https:\/\/pro.agorafinancial.com\/m\/698799\" target=\"_blank\" rel=\"noopener\">Also recommended: Mystery element gaining notoriety.<\/a><\/strong><\/li>\n<\/ul>\n<hr \/>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-louis-basenese.jpg\" alt=\"Louis Basenese\" \/>Stocks have outperformed nearly every asset class since the 1920s.<\/p>\n<p>And that outperformance only improves when you focus on recent history.<\/p>\n<p>Since the rally began just over eight years ago, the S&amp;P 500 has nearly tripled. The current bull market is the second-longest run for U.S. equities on record.<\/p>\n<p>But as you know, the laws of gravity apply in the financial market just as they do in the physical world.<\/p>\n<p>What goes up must come down.<\/p><div id=\"inves-690499284\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>And it\u2019s the fear of that eventual decline that keeps investors up at night.<\/p>\n<p>But fear not, friends.<\/p>\n<p>Today, senior analyst Jonathan Rodriguez will run through one of the best weapons at an investor\u2019s disposal to defend against shocks.<\/p>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <em>Wall Street Daily<\/em><\/p>\n<hr \/>\n<h2 class=\"centered headline\">The Easiest Way to Survive a Stock Apocalypse<\/h2>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-jonathan-rodriguez.jpg\" alt=\"Jonathan Rodriguez\" \/>Warren Buffett, one of the stock market\u2019s most successful investors, has a simple rule about investing\u2026<\/p>\n<p>\u201cNever lose money.\u201d<\/p>\n<p>I couldn\u2019t agree more.<\/p>\n<p>But risk \u2014 and how we manage it \u2014 is a huge part about investing.<\/p>\n<p>Of course, risk means different things to different people.<\/p>\n<p>The most conservative investors are willing to sacrifice profit potential to ensure they don\u2019t lose their shirts.<\/p>\n<p>On the other hand, the market\u2019s most aggressive investors often make huge bets on stocks with little regard for downside.<\/p>\n<p>The truth is a healthy balance between the two mindsets will help investors book consistent gains and preserve capital.<\/p>\n<p>Here is a little-used investor tool that can help you to do just that\u2026<\/p>\n<h2 class=\"subhead\">Stop, Drop and Let Your Gains Roll<\/h2>\n<p>The easiest way to protect yourself from a stock shock is the use of sell stops.<\/p>\n<p>A sell stop is simply a standing order with your broker to sell shares of stock if they fall to a certain price level.<\/p>\n<p>Generally speaking, there are two types of sell stops: stop losses and trailing stops.<\/p>\n<p>A stop loss, or hard stop, is based on a hard price level that you set on your own.<\/p>\n<p>For instance, let\u2019s say you\u2019re sitting on a 50% gain on Apple shares, which trade for around $143. But you have a feeling the stock might drop in the near term.<\/p>\n<p>Instead of selling your position, placing a hard stop at $130 would lock in a 37% gain but require the stock to fall by 9% before tripping the order.<\/p>\n<p>In other words, you give the stock some wiggle room so you\u2019re not stopped out of the trade \u2014 unless it experiences a massive downward move.<\/p>\n<p>Best of all, if Apple shares continue to rise, you can continuously raise your stop and you won\u2019t incur any brokerage fee unless the shares \u201ctrip the wire.\u201d<\/p>\n<p>But what if you want a stop in place but don\u2019t have the time or wherewithal to actively manage it?<\/p>\n<p>Well, you\u2019re in luck\u2026<\/p>\n<p>A trailing stop gives you the best of both worlds.<\/p>\n<h2 class=\"subhead\">A Sell Stop on Autopilot<\/h2>\n<p>Think of a trailing stop as a hands-off, virtually idiot-proof safety net for your investments.<\/p>\n<p>It works just like a stop loss, but instead of setting a hard limit price, you choose a loss percentage limit (such as 10% or 20%).<\/p>\n<p>A trailing stop on a stock rises automatically as the shares do. Hence, they \u201ctrail\u201d your holdings.<\/p>\n<p>For instance, let\u2019s say you buy Apple shares today at $143 and set a 25% trailing stop. The stop is set at $107.25.<\/p>\n<p>And no matter what happens to shares from here, you\u2019ll lose no more than 25% of your purchase price.<\/p>\n<p>If shares move up to, say, $153, the stop rises to $114.75.<\/p>\n<p>This protects you on the downside while allowing your winners to keep running.<\/p>\n<p>The key for a good trailing stop is to choose a percentage that\u2019s tight enough to give you comfort on the downside but wide enough to withstand a little volatility.<\/p>\n<p>After all, you don\u2019t want to get stopped out of a good stock on a brief drop only to watch the stock rip upward on the chart.<\/p>\n<p>For low-volatility large caps, 25% is a solid trailing stop for most investors. And for volatile small-cap and microcap issues, investors might consider a stop between 30% and 50%.<\/p>\n<p>No matter which type of stop you use or threshold you set, stick to it. The market\u2019s most successful investors know when to cut their losses \u2014 allowing them to trade another day.<\/p>\n<p>Bottom line: The use of sell stops may seem like a no-brainer, yet many investors don\u2019t use them. Armed with these simple, easy-to-use tools, you\u2019ll preserve more of your hard-earned capital \u2014 and profits.<\/p>\n<p>On the hunt,<\/p>\n<p>Jonathan Rodriguez<br \/>\nSenior Analyst, <i>Wall Street Daily <\/i><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/06\/22\/newtons-curse-puts-investors-risk\/\" rel=\"nofollow\">Newton\u2019s Curse Puts Investors at Risk<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com The market\u2019s best-performing asset class. When the law of gravity hits the market. The easiest way to survive a stock meltdown. Also recommended: Mystery element gaining notoriety. Stocks have outperformed nearly every asset class since the 1920s. And that outperformance only improves when you focus on recent history. Since the rally began just [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-107833","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=107833"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107833\/revisions"}],"predecessor-version":[{"id":107842,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/107833\/revisions\/107842"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=107833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=107833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=107833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}