"In 2015, more than 75 percent of the companies listed on the IDX booked profits even though some experienced declines, particularly the commodity sector. The bourse believes Indonesia's economy in 2016 will exceed five percent and topples last year's record of 4.79 percent. They just aren't as much of a sure thing as they are often described or thought to be.TEMPO.CO, Jakarta-The Indonesian Stock Exchange (IDX) is confident that issuers will perform well this year, following the national economic growth projection of more than five percent. Stop-loss orders are not useless, by any means. Such investors are typically diversified enough that the fate of an individual stock is not critical to their success, and they will own safe stable investments to offset the natural volatility of stocks.ĭon't get me wrong. Either way, the stop-loss order didn't get you out at $45.Īre you investing in the stock or trading in it? For long-term investors, limiting losses is often better accomplished by a more conservative portfolio structure to begin with. In our example, if the limit was set at say $44, the stop would have been hit, but with ABC opening at $40, the limit would have prevented a sale until the price rose to $44, if it ever did. The limit however, does not guarantee a sale either. To combat this, you can place a "limit" on the stop-loss by which you will sell for no less than the limit price. It doesn't really matter why ABC opens lower, but if it opens at $40, the sell order is triggered, and ABC will be sold at the prevailing market price, not $45. We see this often when the stock opens at a substantially lower price, but it can happen intraday as well.
You may think you have a maximum loss of $5, but that is not necessarily the case.Ī stop-loss can fail as a loss limitation tool because hitting the stop price triggers a sale but does not guarantee the price at which the sale occurs. For example, you own shares of ABC which are currently selling for $50/share and place a stop-loss order at $45/share. You may not hear about them much because they can be a pain in the neck and often fail as a loss-protection mechanism.Ī stop-loss order is an order that instructs a brokerage to sell a security, usually a stock or an exchange-traded fund, when the security reaches a certain price.
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