Go to Jeff Salisbury LWGate Home Page.From: "Jerome Buckmelter" <jsjbuck@myexcel.com>
Subject: [CANSLIM] Stop losses and DHI
Date: Sun, 8 Jun 2003 09:12:23 -0700
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WON does not like stop losses, but says for those who cannot watch their
stocks, it's okay. But is it? What are the real pitfalls with stop
losses? I am concerned with what happened to DHI on Thursday. According
to DGO, DHI plummeted from 28.58 to 20.22, about $9 or 41%, in about one
minute apparently, then rebounded just as fast. I would think that
everyone with a stop loss order between $28.58 and $20.22 got shaken
out. How can this happen? Could some traders have conspired to sell a
few stocks, i.e. place an ask, at an extremely low price just to convert
the stop losses to market orders, and then swoop in to pick up the stock
for cheap? Using DHI as an example, could a trader offer to sell one
share at $20.22, sell that share, and immediately follow up with market
order for 10,000 shares, which in turn would be purchased from anywhere
between 20.22 and $28.58? Is this how the market works? Or is there
some safe guards preventing this? How else could the sudden and
dramatic price plunge have occurred with DHI? Thanks in advance for the
education in this matter.
Jerome Buckmelter
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<p class=3DMsoNormal><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'>WON does not like stop losses, but says for those who =
cannot
watch their stocks, <span class=3DGramE>it’s</span> okay.<span
style=3D'mso-spacerun:yes'> </span>But is it?<span
style=3D'mso-spacerun:yes'> </span>What are the real pitfalls with =
stop
losses? I am concerned with what happened to DHI on Thursday.<span
style=3D'mso-spacerun:yes'> </span>According to DGO, DHI plummeted =
from
28.58 to 20.22, about $9 or 41%, in about one minute apparently, <span
class=3DGramE>then</span> rebounded just as fast.<span
style=3D'mso-spacerun:yes'> </span>I would think that everyone =
with a stop
loss order between $28.58 and $20.22 got shaken out.<span
style=3D'mso-spacerun:yes'> </span>How can this happen?<span
style=3D'mso-spacerun:yes'> </span>Could some traders have =
conspired to
sell a few stocks, i.e. place an ask, at an extremely low price just to =
convert
the stop losses to market orders, and then swoop in to pick up the stock =
for
cheap? <span style=3D'mso-spacerun:yes'> </span>Using DHI as an =
example,
could a trader offer to sell one share at $20.22, sell that share, and
immediately follow up with market order for 10,000 shares, which in turn =
would
be purchased from anywhere between 20.22 and $28.58?<span
style=3D'mso-spacerun:yes'> </span>Is this how the market =
works?<span
style=3D'mso-spacerun:yes'> </span>Or is there some safe guards =
preventing
this?<span style=3D'mso-spacerun:yes'> </span>How else could the =
sudden and
dramatic price plunge have occurred with DHI?<span
style=3D'mso-spacerun:yes'> </span>Thanks in advance for the =
education in
this matter. <o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 face=3DArial><span =
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<p class=3DMsoNormal><font size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;
font-family:Arial'>Jerome Buckmelter<span =
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</span><span style=3D'mso-spacerun:yes'> </span><span
style=3D'mso-spacerun:yes'> </span><span
style=3D'mso-spacerun:yes'> </span><o:p></o:p></span></f=
ont></p>
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Next Article (by Subject): RE: [CANSLIM] Stop losses and DHI "Katherine Malm"
Previous Article (by Subject): Re: [CANSLIM] Slighty off topic Jwvitale@aol.com
Next in Thread: RE: [CANSLIM] Stop losses and DHI "Katherine Malm"
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