According to Wall Street Journal this morning!
Global Stocks start the week with losses according to the Wall Street journal this morning. Did you think about hedging your portfolio instead of only working with "stop-loss" orders?
Maybe it was just a volatility of the day – i.e. market fluctuation of the day – but your stop loss order was triggered anyway?
Hedging gives you more headroom to think about what you want to do and analyse the investment before selling (maybe it was just a temporary downturn)?
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If you work with hedging instead of stop loss it gives you the possibility to take the time to decide if you still have a positive view of the investment, and you don’t need to sell the full position since you have hedged it – meaning that you have arranged for a floor of possible loss (caped the downturn/loss) at a certain level. If you work with stop-loss it means that you have sold your investment, according to the stop loss, if the investment falls below your order’s price level. If you make the analysis, after you’ve sold due to your stop-loss being triggered, then you have to buy the investment back again.
Understanding hedging can be very beneficial both for you as an investor as well as for the whole stock market if not “too many” stop loss orders are triggered when it was not completely necessary.
However, hedging of financial assets require that you and/or your broker understands the hedging instruments.
AimHill Consulting Group