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A bounce-back may occur but be only temporary.  Prices in the stock market sometimes immediately rise after a significant drop in price, as those with “short” positions cover their positions which creates a buying pressure and rising prices for the symbol.  It’s usually just a temporary phenomenon if the underlying selling pressure remains.

If you are going to use SmartStops proactively and set stops in advance, you need to be prepared that you may have more whipsaws then if you followed it reactively and decided to sell after the alert  (at a price you determine).   It is a tradeoff between potentially being whipsawed (i.e. the price rises after the stop is hit on a permanent uptrend) vs. the highest protection of profits or cutting of losses by having a stop automatically executed for you.

For more longer-term investors vs. active traders, we suggest that SmartStops be used in a reactive manner vs. proactively.   Furthermore, you can follow our Conservative risk triggers vs. Aggressive which give that symbol’s range of price further room to fluctuate.

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