NYSE To Eliminate Stop Loss Orders
Nov 26, 2015 13:00:03 GMT -5
walnut, Herceg, and 2 more like this
Post by huh on Nov 26, 2015 13:00:03 GMT -5
NYSE to eliminate stop loss orders
I can't believe the things the media is writing about stop orders. Trying to make it sound as if retail stop loss orders were the reason for the deep dive in August...
"Stop loss creates a false sense of safety"
"In practice, though, these orders very frequently lock in losses, reducing overall returns" (uh, duh! that's the idea! They also reduce overall losses!)
"The perception is they limit losses, and that’s just not the case,” (yes, yes they do!)
"Philosophically, stop orders don’t make sense because past price movements have no bearing on future performance" (what???)
"And, heck, even if a stock keeps dropping after you to sell it, there is no assurance whatever you buy with the proceeds won’t drop too" (what the what?)
"stop-losses boost trading costs"
"They could also trigger unwanted taxable events...If you need to withdraw funds from your portfolio to pay these taxes, you will miss the future growth this money would otherwise have achieved"
"In our view, we’d humbly suggest investors should voluntarily cease and desist from using stop losses, regardless of what the exchanges and brokers do."
This is ridiculous! Talk about reaching. Fewer than 0.3% of NYSE orders are stop loss orders, yet they are trying to make it out as if these were the cause of the 08/24 crash. What about the hundreds of millions of algo orders that executed that same day? And besides, what happened to the "liquidity makers"? Those sorts of moves surely wouldn't happen if they were actually buying.
I don't know if brokers will follow suit, but I would never, NEVER use a broker that did not allow me to use a stop loss, stop limit or at least a trigger order to protect an investment. Take those away, and I take my money away.
I can't believe the things the media is writing about stop orders. Trying to make it sound as if retail stop loss orders were the reason for the deep dive in August...
"Stop loss creates a false sense of safety"
"In practice, though, these orders very frequently lock in losses, reducing overall returns" (uh, duh! that's the idea! They also reduce overall losses!)
"The perception is they limit losses, and that’s just not the case,” (yes, yes they do!)
"Philosophically, stop orders don’t make sense because past price movements have no bearing on future performance" (what???)
"And, heck, even if a stock keeps dropping after you to sell it, there is no assurance whatever you buy with the proceeds won’t drop too" (what the what?)
"stop-losses boost trading costs"
"They could also trigger unwanted taxable events...If you need to withdraw funds from your portfolio to pay these taxes, you will miss the future growth this money would otherwise have achieved"
"In our view, we’d humbly suggest investors should voluntarily cease and desist from using stop losses, regardless of what the exchanges and brokers do."
This is ridiculous! Talk about reaching. Fewer than 0.3% of NYSE orders are stop loss orders, yet they are trying to make it out as if these were the cause of the 08/24 crash. What about the hundreds of millions of algo orders that executed that same day? And besides, what happened to the "liquidity makers"? Those sorts of moves surely wouldn't happen if they were actually buying.
I don't know if brokers will follow suit, but I would never, NEVER use a broker that did not allow me to use a stop loss, stop limit or at least a trigger order to protect an investment. Take those away, and I take my money away.
