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Proper or best practice for Stop Limit orders?

we have had unprecedented rise in markets over the past few years and have gains. Looking at ETF's and individual equity holdings, I would like to lock in gains while allowing it to rise. I can adjust my limits as the market tight limits. What is the rule or best ideas for setting limits ? 5 % of current price ? Recent support levels ?
Using Moving averages ?
bollinger bands ?
Point & Figure ?

you input appreciated or if you know of a book to look to for reference?


  • Well, you are asking for contradictory things. Your wish to lock in gains requires a short term perspective, while your wish to allow your gains to run requires a long term perspective.

    The question is, how much current profit are you willing to sacrifice for possible future profits? If the answer is none, then sell now. If the answer is five per cent, ten per cent, twenty per cent, etc. then place your stop there. Or, sell enough of your current position to feel like you have been paid for the risk you have taken so far, while leaving enough in to satisfy your wish to participate in any future gains.

    You are not really managing the market or your positions, you are managing your feelings.

    If you look at the past history of any market, ETF or equity, you will see that each has topped in a different way each time. Any particular method would have worked well in some instances and poorly in others. Choosing which will work best in the current market is a matter of chance. There is no being "right" about the market, only degrees of being wrong. If it helps you to have a method, choose one that is compatible with your temperament and beliefs about the market and accept the results. Whether you choose correctly is a matter of how you feel about the results, not the results themselves.
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