First off, there are so many recommendation you can find on the web about what percentage should I use to set a stop loss order or a trailing stop.   The are articles from people to say use a 8%, 10%, 15% or 20% trailing stop percentage. But unfortunately that is the least intelligent way to approach the subject.   In fact, jjust think about using a percentage for a minute.   It’s just a random value , reflects nothing but a price point and you have to pick it.  And should you use the same one for all stocks regardless of their price points?  ANSWER:  NO.   And should you change it up to tighten or widen based on risk increasing or not? ANSWER:  YES.  Then how does one know when to change it up?     Good question!

And should one use perhaps use some technical analysis approaches – perhaps l ATR, Moving Averages. Volatility Quotient?  But if so, which ones?  And what values should one use when using those?  For instance, should ATR be calculated with a multiplier and adjusted based on a symbol’s behavior?  Should Moving averages be based on EMA, DMA, SMA and should it be 5, 10, 20, 50, 200 or any number in-between or larger? Or should it be a crossover value and then what combination should get used?  Or should it be say MACD but then is 12,26,9 the right variable setting for that study?   And is Volatility the right calculation to base off of?  ANSWER:  NO

It was a starting point for brokerages that came online and onto the internet to be able to offer a Trailing Stop loss percent  that a user could set. But that approach is so old and out-of-date.  And it is basically an “unintelligent” appproach.  And to try to determine one’s own technical analysis approach to where to set the stop loss order – well that can take years and years of experience and unfortunate losses.  Besides, unless you want to become a full-time chartist and monitoring your positions each and every day – that’s a huge time sync!   Most investors nor advisors want to invest that kind of time.

That’s why SmartStops came into existence.  To help DIY’ers leverage off the decades of real wall street experience the founders brought to the table.   It’s helped customers since 2008 and continues to today (see covid results here).

Complex Technical Analysis for Stops

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